By Jeffrey Heller
JERUSALEM (Reuters) - Gunmen killed seven people in southern Israel Thursday in three attacks along the Egyptian border, drawing Israeli accusations that militants from Gaza were responsible and that Cairo's new rulers were losing their grip on a porous frontier.
Israel said the assailants infiltrated from the Hamas-run Gaza Strip via Egypt's Sinai desert, despite stepped up efforts by Egyptian security forces in recent days to rein in Palestinian and Islamist radicals.
"This was a grave incident in which Israelis and Israeli sovereignty were harmed. Israel will respond accordingly," Prime Minister Benjamin Netanyahu said in a statement. He was due to speak further on the most deadly attack in Israel since 2008 in a televised address at 7:30 p.m. (1630 GMT).
Concern was high in the Gaza Strip that Israel would launch retaliatory attacks. Egyptian security sources said it was unlikely the gunmen had come from Egyptian territory where border patrols had not detected any "suspicious movements."
Israel's military said the attacks on Highway 12 began when "terrorists shot at a bus on its way to (the city of) Eilat and then fired an anti-tank rocket at another vehicle. At the same time, a military patrol hit an explosive device."
"I saw two men in fatigues shooting at me," the bus driver, Benny Bilbaski, told Israel Radio. "I saw that there were wounded on the bus but I continued to drive on, looking straight not looking right or left. Once I got a kilometer past the area and I was out of range we took care of the wounded."
The Magen David Adom ambulance service said seven people were killed along the road, just meters from the border with Egypt. The military put the number of wounded at around 25.
Israeli special forces were called in and engaged the gunmen as police and the military closed roads around Eilat, a popular Red Sea resort. The military said between two and four gunmen were killed. Israeli media reports said up to seven were killed.
"It was a grave terrorist incident that took place in several locations," said Defense Minister Ehud Barak. "It reflects the weakening of Egypt's hold in the Sinai and the broadening of activities by terror elements."
Mark Regev, a spokesman for Netanyahu, said Israel "has specific and precise information that these terrorists who targeted Israelis today came out of the Gaza Strip."
HAMAS DENIES RESPONSIBILITY
A senior Israeli official said the gunmen, unable to cross into Israel through the heavily patrolled border with the Gaza Strip, had gone into the Sinai and then infiltrated from there into southern Israel.
Hamas in Gaza denied responsibility and said it would fight back if it came under Israeli attack. "We will not stand handcuffed and we will spearhead resistance to the occupation," said senior official Salah Al-Bardaweel.
Israeli officials have voiced concern that militant groups in the Sinai have been making use of a security vacuum left by the overthrow of Egyptian President Hosni Mubarak in February.
The Israeli shekel fell against the dollar and stocks dipped Thursday. The violence appeared to take some domestic political pressure off Netanyahu: leaders of escalating protests against high living costs called off weekend demonstrations after news of the Israeli casualties broke.
Egypt, which signed a peace treaty with Israel in 1979, recently stepped up security activity in the Sinai.
Tuesday, Egyptian security sources said an army crackdown on armed groups in the northern Sinai had netted four Islamist militants as they prepared to blow up a gas pipeline.
Israel is building a fence along its 180-km-long frontier with Egypt, but very few sections have been completed.
(Additional reporting by Yusri Mohamed in Ismailia, Egypt; Editing by Jon Hemming)