AFP/ Tripoli

The death toll for the shelling of a rally in Libya's second city Benghazi protesting against a UN-proposed peace deal has jumped to 12, medics said.

At least 12 people died and 39 were wounded after a volley of shells hit the rally attended by hundreds of people, the LANA news agency close to the internationally recognised Libyan government reported Saturday.

Those present were demonstrating against a proposed power-sharing deal put forward by Libya's UN envoy, Bernardino Leon.

On their Facebook pages, the Benghazi Medical Centre announced eight dead, while the city's Al-Jalaa hospital announced four had died. Medics initially said five people were killed.

There was no immediate word on who was behind the shelling.

Libya descended into chaos after the October 2011 ouster and killing of longtime dictator Moamer Kadhafi, with two governments vying for power and armed groups battling for control of its vast energy resources.

A militia alliance including Islamists overran Tripoli in August 2014, establishing a rival government and a parliament that forced the internationally recognised administration to flee to the country's remote east.

On October 8, after almost a year of arduous negotiations, Leon put forward a list of names to head a power-sharing government, but both sides rejected the proposed appointments.

Friday's shelling came two days after Leon insisted he would press on with efforts to clinch a political deal.

The UN Support Mission in Libya (UNSMIL) condemned the attack.

"UNSMIL calls on Libyans to reject violence as a means to settle political differences and stresses that peaceful expression of political views is one of the basic rights in a free society," it said.

A unity government in Libya is seen as the best chance to tackle the rise there of the Islamic State group and migrant-smuggling from Libya across the Mediterranean to Europe.

"Only through unity can terrorism be confronted and violence brought to an end," UNSMIL added.

Fayez el-Serraj, a member of the internationally recognised parliament who has been put forward as prime minister in the latest proposal for a unity government, agreed.

"We need to work to overcome our political differences to stand up, hand in hand... against terrorism," he said.

The Tripoli authorities also condemned the attack, calling it a "criminal and terrorist act carried out by those who have been cracking down on Benghazi for a year and a half."

The UN last month accused the army of Libya's internationally recognised government of deliberately trying to sabotage the peace talks with a new offensive in Benghazi.