* Israeli military says it has suspended Gaza attacks
* Rockets fired from Gaza after ceasefire starting time
* Hamas armed wing vows to fight on
* Hamas leader in Cairo says group undecided over truce
By Nidal al-Mughrabi and Dan Williams
GAZA/JERUSALEM, July 15 (Reuters) - Palestinian militants fired rockets at Israel on Tuesday after it agreed to an Egyptian proposal to end the week-old Gaza conflict, and a Hamas leader said the Islamist group was still undecided on whether to accept the ceasefire.
Under the terms of the blueprint announced by Egypt - whose military-backed government has been at odds with Hamas - a mutual "de-escalation" of fighting was to begin at 9 a.m. (0600 GMT), with hostilities ceasing within 12 hours.
Rocket salvoes were fired at Israel after 9 a.m. and live television showed the Iron Dome anti-missile system intercepting several projectiles over the port city of Ashdod, where a factory was hit. Emergency services said no one was hurt.
Sirens sounded in other parts of southern Israel after what Channel Two television reported had been volleys of at least 10 rockets.
Israel said it had halted its attacks in the Gaza Strip but would respond strongly if Palestinian strikes persisted.
At Israeli military headquarters in Tel Aviv, Prime Minister Benjamin Netanyahu's security cabinet approved the Egyptian offer, an official statement said. Political sources said the vote in the forum was 6-2.
Hamas's armed wing, the al-Qassam Brigades, rejected the reported text of the deal announced by Egypt, Gaza's neighbour, saying: "Our battle with the enemy continues and will increase in ferocity and intensity."
But Moussa Abu Marzouk, a top Hamas official who was in Cairo, said the movement had made no final decision.
"We are still in consultation and there has been no official position made by the (Hamas) movement regarding the Egyptian proposal," Moussa Abu Marzouk, who was in Cairo, said in a Facebook posting.
Sami Abu Zuhri, a Hamas spokesman in Gaza, said earlier on Tuesday that the Islamist group had not received an official ceasefire proposal, and he repeated its position that demands it has made must be met before it lays down its weapons.
Amos Gilad, a senior Israeli defence official and envoy to Cairo, said Hamas had been weakened by the air and sea bombardment of Gaza that medical officials in the densely populated enclave said has killed at least 184 people, many of them civilians.
"Look at the balance, and you see that Hamas tried every possible means of striking at Israel," Gilad told Israel's Army Radio.
Hundreds of rocket attacks on Israel have caused no fatalities, largely due to Iron Dome. But the strikes have disrupted life across the country and sent people rushing into shelters.
Israel had mobilised tens of thousands of troops for a threatened Gaza invasion if the rocket salvoes persisted in the worst flare-up of Israeli-Palestinian hostilities in two years.
"We still have the possibility of going in, under cabinet authority, and putting an end to them (the rockets)," Gilad said.
In overnight attacks, Israel said it had bombed 25 sites in Gaza. Palestinian medical officials said a 63-year-old man and a 52-year-old woman were killed.
Under the ceasefire proposal announced by Egypt's Foreign Ministry, high-level delegations from Israel and the Palestinian factions would hold separate talks in Cairo within 48 hours to consolidate the ceasefire with "confidence-building measures".
The surge in hostilities over the past week was prompted by the murder last month of three Jewish seminary students in the occupied West Bank and the revenge killing on July 2 of a Palestinian youth in Jerusalem. Israel said on Monday three Jews in police custody had confessed to killing the Palestinian.
Hamas leaders have said a ceasefire must include an end to Israel's blockade of Gaza and a recommitment to a truce reached in an eight-day war there in 2012. Hamas also wants Egypt to ease restrictions at its Rafah crossing with Gaza imposed after the military toppled Islamist president Mohamed Mursi last July.
The Egyptian proposal made no mention of Rafah or when restrictions might be eased. It said only that "crossings shall be opened and the movement of persons and goods through (them) shall be facilitated once the security situation becomes stable on the ground".
Hamas has faced a cash crisis and Gaza's economic hardship has deepened as a result of Egypt's destruction of cross-border smuggling tunnels. Cairo accuses Hamas of aiding anti-government Islamist militants in Egypt's Sinai peninsula, an allegation the Palestinian group denies.
Hamas has said it also wants the release of hundreds of its activists arrested in the West Bank while Israel searched for the three missing teens. The detainees include more than 50 Hamas men freed from Israeli jails in a 2011 prisoner exchange.
The proposed truce made no mention of the detainees in stipulating that "other issues, including security issues, shall be discussed with the sides".
The Arab League said in a statement it welcomed the Egyptian initiative "to protect the lives of the innocent".
Palestinian President Mahmoud Abbas, who reached an agreement with Hamas in April that led to the formation of a unity government last month, urged acceptance of the proposal, the official Palestinian news agency WAFA said.
(Additional reporting by Allyn Fisher-Ilan, Maayan Lubell in Jerusalem, Noah Browning in Gaza and Michael Georgy and Yasmine Saleh in Cairo; Writing by Jeffrey Heller and Dan Williams, editing by John Stonestreet)
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