The dead included a 17-year-old boy killed when security forces opened fire indiscriminately in the eastern city of Deir Ezzor, it said, prompting a denial from Damascus.
Activists had urged Syrians to rally in support of the rebel Free Syrian Army whose mutinous soldiers have claimed repeated attacks, including an ambush Thursday that Damascus said killed six pilots and four other people.
State news agency SANA said huge rallies in support of President Bashar al-Assad were held in Damascus and Syria's second city Aleppo, with protesters denouncing the Arab League moves and vowing to confront "the conspiracy" facing their nation.
State television meanwhile said Syrian security forces had bust a "terrorist gang" in the central province of Homs, killing 16 of its members, arresting dozens and seizing large quantities of arms.
The operation was carried out in the town of Rastan in Homs, the report said, without specifying when it was launched.
It cited an unidentified official as saying that the "armed men sowed terror in the town."
Turkish Foreign Minister Ahmet Davutoglu said in Istanbul the Arab League ultimatum to accept a mission of several hundred observers or face sanctions had been a last chance for Assad's regime.
"Syria was expected to say yes to the observers... unless there is a reality it hides about the situation in Syrian cities," Davutoglu said after the deadline's expiry.
"As it said no, it increased... the concerns on the humanitarian situation," he said, in the wake of UN estimates that the lethal crackdown on dissent has cost more than 3,500 lives since protests started in March.
Anatolia news agency quoted Davutoglu as also saying he would join a meeting of Arab League foreign ministers in Cairo on Sunday to discuss next moves.
Turkey already had some measures in hand against Damascus, he said, adding: "We are going to harmonise them with those prepared by the Arab League."
The Arab League had earlier said its finance ministers would meet on Saturday to vote on sanctions against Damascus -- including the suspension of flights and freezing government assets -- if Syria failed to sign.
The League also for the first time said it wants UN help in its showdown with Assad, and diplomats in New York said on Friday the League may want a UN contribution to the international observer mission that Syria is refusing to let in.
In New York, a UN spokesman said the world body's human rights chief is in contact with the Arab League over Syria.
UN Secretary General Ban Ki-moon is "extremely concerned at the escalating crisis and mounting death toll in Syria" and is ready to help the Arab League, said UN spokesman Martin Nesirky, without elaborating.
Nesirky told reporters however that the office of UN Human Rights Commissioner Navi Pillay "is in contact with the secretariat of the League of Arab States" over the request.
But Syria's Cold War ally Russia, which last month used its UN Security Council veto to block a resolution that would have threatened "targeted measures," dismissed the deadline.
"At this stage, what we need is not resolutions, sanctions or pressure, but inter-Syrian dialogue," foreign ministry spokesman Alexander Lukashevich said in Moscow.
Syrian officials and analysts said this week that Arab sanctions on Damascus -- which is also facing a raft of US and European punitive measures -- could choke the country's economy.
Syria depends on its Arab neighbours for half or its exports and a quarter of its imports.
"If that is to happen, it will be very unfortunate because the damage will be to all sides," Economy Minister Mohammed Nidal al-Shaar told AFP in an exclusive interview.
But "we don't expect all Arab countries to yield or participate in sanctions," he added. "In fact, we are almost certain that some Arab countries will not participate," he said.