Defense Minister Moshe Ya'alon said on Saturday that Israel "respects full Egyptian sovereignty," in response to reports that Israel was responsible for a drone strike that killed five suspected Islamic militants and destroyed a rocket launcher in Sinai on Friday.

"The State of Israel is aware and appreciates increased activity by the Egyptian military recently against terrorism across the Sinai Peninsula, including this weekend. We know it is fighting first and foremost to protect the citizens of Egypt and Egyptian sovereignty. We will not allow for rumors or speculations that have been spreading over the last 24 hours to harm the peace accord between the two countries," the defense minister said.

The Al-Qaida-linked group , Ansar Jerusalem, active in the Sinai Peninsula said Saturday that its fighters were the target of a reported Israeli drone strike into Egyptian territory, a rare operation that could indicate increased Egyptian-Israeli security cooperation against militants in the lawless border zone.

However, Egyptian armed forces spokesperson Ahmad Mohammad Ali denied the Israeli strike had occurred. He said the Egyptian army is combing the region and investigating the reports. Israeli aircraft did not breach Egypt's air space, nor was such an operation coordinated between the two countries, he said. Ali further noted that the Egyptian military is continuing its campaign against terror groups in Sinai.

Egyptian security forces stood guard at checkpoints as more than 100 cars, some carrying dozens of jihadists, took part in a funeral procession for four slain fighters in the northern part of the Sinai Peninsula on Saturday. A little known militant group, Ansar Jerusalem, said its men were the target of a reported Israeli drone strike in Egyptian territory that killed the four militants.

Hundreds of people, including armed jihadists, tribesmen carrying weapons and family members of the dead took part in the funeral, where the bodies were displayed in the back of pick-up trucks draped by black flags inscribed with Islamic verses. The flags are often used by Al-Qaida militants, but also by Islamists. Some in the procession chanted slogans against Israel and Egypt's army, currently battling insurgents in the area.

The procession passed through checkpoints peacefully, though it is believed that many who were present are wanted by police for carrying out near daily attacks on security forces in Sinai. Security officials said the nature of the attack, possibly from an Israeli drone, made it difficult to try and stop the procession for fear of enflaming an already volatile situation.

The attack came a day after Israel briefly closed its airport in Eilat, in response to unspecified security warnings. Israel has recently deployed an Iron Dome Battery near Eilat, which has recently been targeted by rocket fire from the Sinai. Defense officials have voiced concern over security in Sinai and Eilat, following the political upheaval surrounding the ousting of Egyptian President Mohammed Morsi.