(Releads with Israel's reported response)
CAIRO, Jan 17 Israel has responded positively to an Egyptian call for a halt to its three-week offensive in Gaza, Egypt's state-run Middle East News Agency (MENA) reported on Saturday.
The agency said Israeli Prime Minister Ehud Olmert called Egyptian President Hosni Mubarak and asserted "Israel's positive response" to Egyptian demands for a ceasefire between Israel and Hamas militants in the coastal strip.
An Israeli official said on Saturday the Jewish state planned to halt its offensive in Gaza without any deals with Hamas, in an apparent effort to deny the Islamist group any gains from the conflict.
In a televised speech that appeared to anticipate the decision, Mubarak said Israel would not achieve its objectives against Hamas.
He said both Israel and Hamas have held to strict positions "that the continuous blood-letting in Gaza cannot tolerate" during indirect negotiations on an Egyptian ceasefire plan.
Hamas officials held talks in Cairo with Egyptian mediators on Saturday to hear the Israeli response to proposals put forward by the Islamist group that rules the Gaza Strip.
Hamas has offered a one-year, renewable truce on condition that all Israeli forces leave Gaza within a week and that all the border crossings with Israel and Egypt are opened.
Mubarak also said Egypt would call for an international meeting to discuss post-war reconstruction in the Palestinian coastal enclave.
He said his country would not agree to the presence of foreign observers on its soil to monitor the border with Gaza.
"I say that this is a red line and I will not allow it," he said in the speech.
Egyptian Foreign Minister Ahmed Aboul Gheit said earlier in the day Egypt was not committed to a U.S.-Israeli deal, signed on Friday, to halt arms smuggling into Gaza. (Writing by Alaa Shahine; Editing by Dominic Evans)