SIRTE, Libya (Reuters) - The Swiss businessman whose detention in Libya unleashed a diplomatic row that dragged in most European countries will be released from prison very soon, a Libyan official said on Friday.

Predictions of an imminent release for the businessman, Max Goeldi, coincided with Swiss media reports that Spain, holder of the European Union presidency, was sending its foreign minister to Libya to try to broker a solution to the row.

Tripoli stopped issuing visas to most European nations in retaliation for Switzerland barring entry to nearly 200 high-ranking Libyans in an effort to press the North African country into freeing Goeldi.

"Goeldi will be released very soon," a senior Libyan official, who did not want to be identified, told Reuters. He did not give any more details.

Goeldi has been barred from leaving Libya since July 2008, when police in Geneva arrested a son of Libyan leader Muammar Gaddafi on charges -- which were later dropped -- of mistreating two domestic employees.

The Swiss man is serving a four-month sentence after a Libyan court found him guilty of violating immigration rules.

The visa row has unsettled European countries with substantial business ties to oil exporter Libya, especially its near-neighbours Italy and Malta.

There were signs that the dispute could be easing on Friday after Swiss television said visa restrictions on some Libyan citizens had been lifted. Switzerland's Foreign Ministry declined to comment.

Spanish Prime Minister Jose Luis Rodriquez Zapatero said after talks in Brussels that a resolution was closer and he urged Libya to end its travel curbs on Europeans.

Swiss media reported that Spanish Foreign Minister Miguel Angel Moratinos was travelling to Libya on Saturday. The Spanish Foreign Ministry could not immediately be reached to confirm the reports.

It was likely Moratinos would go to the city of Sirte, where Gaddafi is hosting a summit on the Arab League.