* Four Islamists killed in Sinai by air strike on Friday
* Their group blames Israel, Egypt denies that
* Desert peninsula a security headache for Egypt and Israel
Four Islamist militants in Egypt's North Sinai were killed by an air strike that their comrades said on Saturday had been done by an Israeli drone but which state media said was the work of an Egyptian army helicopter.
Israel dismissed as "rumours and speculation" the idea that it had struck on Egyptian territory.
The neighbouring countries have often cooperated in tackling the Islamist threat in Sinai and neither seemed interested in creating a fuss over this case. Egypt's armed forces officially denied Israel had launched the attack. Israel, while not giving any details on the incident, cast it as an Egyptian operation.
Five security sources had earlier told Reuters that Israel had carried out a missile strike that killed the militants as they prepared to launch rockets at Israel.
The Ansar Bayt al-Maqdis group said on a website: "Our heroes became martyrs during their jihadi duties against the Jews in a rocket attack on occupied lands."
The group said the attack was by an Israeli drone, but did not say how it knew that to be the case. It criticised the Egyptian military for what it called its repeated cooperation with Israel.
The state news agency quoted a security source as saying an Egyptian military helicopter killed the militants.
The Egyptian military said two explosions took place at a site 3 km (2 miles) west of the Israeli border and south of the city of Rafah on Friday afternoon.
One source said Israeli aircraft had observed the militants preparing three rocket launchpads to hit Israel. It launched a missile, killing two men, then killed another pair who stepped up to the launchpads after the first strike.
However, an Egyptian army spokesman denied in a subsequent statement any Israeli role in the incident.
In Jerusalem, Israeli military spokesmen declined comment and Defence Minister Moshe Yaalon dismissed what he described as "rumours and speculation" about the Sinai strike.
"The state of Israel respects the sovereignty of Egypt in its entirety," he said in a statement, adding that there was "stepped up activity by the Egyptian army recently, including this weekend, against the terrorist infrastructure in the Sinai peninsula". He did not offer any operational details.
Militants based mainly in North Sinai have escalated attacks on Egyptian security forces and other targets since July 3, when the army deposed Islamist President Mohammed Mursi.
The Sinai is largely demilitarized as part of the Israeli-Egyptian peace treaty of 1979 but Israel has approved troop reinforcements to combat the militants and arms smuggling by Palestinians into Gaza.
The desert peninsula has long been a security headache for Egypt and its neighbours. Large and mostly uninhabited, it also borders the Palestinian-ruled Gaza Strip and the Suez Canal linking Asia to Europe. It is home to nomad clans disaffected with rule from Cairo.
The Egyptian army said on Wednesday it had killed 60 militants in the Sinai Peninsula in the month since President Mohamed Mursi's overthrow on July 3.