(Recasts with Israel comments, adds Libyan minister, details)

By Louis Charbonneau

UNITED NATIONS, Jan 6 (Reuters) - Israel signaled on Tuesday that it might be open to Egypt's ceasefire proposal that would put an end to an 11-day military assault of the Gaza Strip that has left scores of militants and civilians dead.

"I am sure that it will be considered and you will find out whether it was accepted," Israel's U.N. Ambassador Gabriela Shalev told reporters. "But we take it very, very seriously," she said, while offering no guarantees that Israel would respond positively.

French Foreign Minister Bernard Kouchner told reporters he expected Israel's response on Wednesday to the truce proposal announced by Egyptian President Hosni Mubarak after a meeting with French President Nicolas Sarkozy.

"We harbor hope that it will be a positive one," Kouchner told the Security Council at a special meeting on the Gaza crisis which he chaired as the council's current president.

The Mubarak announcement received explicit backing from Palestinian President Mahmoud Abbas, U.S. Secretary of State Condoleezza Rice, Libyan Foreign Minister Mohammed Abdel-Rahman Shalgam and others during the 4-hour council session.

Diplomats said negotiations in New York on a ceasefire resolution had been overtaken by Mubarak's proposal, which calls for a limited initial truce to allow aid into Gaza and give time for Egypt to broker a permanent ceasefire.

Libya has circulated several versions of a draft resolution that calls for an immediate truce and criticizes Israel. Western diplomats said the text had little chance of passing as is, but Shalgam said Tripoli would press ahead with its draft, which has been endorsed by the Arab League.

Echoing U.S. demands, Kouchner told the council that any ceasefire would have to ensure an end to Palestinian rocket attacks against southern Israel and the smuggling of weapons from Egypt into Gaza for Hamas militants.

He also said the truce might require the presence of international monitors.

RICE: NO REARMAMENT OF HAMAS

Abbas' Fatah movement was ousted from Gaza in 2007 when Hamas, which does not recognize Israel's right to exist, seized control of the enclave. Gaza has some 1.5 million Palestinians, most of whom are dependent on some form of humanitarian aid.

Rice said it was crucial for Abbas' Palestinian Authority to re-establish "its legitimate control" over Gaza.

"Our goal must be the stabilization and normalization of life in Gaza," Rice said, adding that any ceasefire plan "has to be a solution that does not allow the rearmament of Hamas."

Shalev was dismissive of the idea that the Security Council was obligated to weigh in on the conflict. "The credibility of this council is measured not by the pieces of paper it issues, but by the values it upholds," she said.

Abbas criticized Israel for ignoring calls from around the globe for an end to its military campaign in Gaza -- and for the large number of civilian deaths it has caused. "The Israeli machine of destruction continues to kill," Abbas said.

Earlier on Tuesday, Israeli fire killed at least 40 Palestinians at a U.N. school in Gaza where civilians had taken shelter. Israel said its troops were returning fire from the school.

U.N. Secretary-General Ban Ki-moon said attacks on schools were "totally unacceptable and should not be repeated." He said he would travel to Israel and the Palestinian territories next week to support efforts to end the crisis.

More than 600 Palestinians have been killed and at least 2,700 wounded since Israel began the campaign last month with the declared aim of ending rocket attacks by Hamas Islamist militants on its southern towns. Ten Israelis, including three civilians hit by rocket fire, have been killed. (Additional reporting by Sue Pleming and Claudia Parsons, Editing by Jackie Frank)

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