An Israeli air strike killed two Palestinians on the Egyptian side of the border with Gaza early Thursday following rocket fire from the area into Israel, the territory's Islamist rulers Hamas said.

Israel denied it had carried out any strikes over the border into Egypt's restive Sinai Peninsula in response to the rockets, which caused no casualties.

The spokesman of Gaza's Hamas-run health ministry, Ashraf al-Qudra, named the two men killed as Hossam al-Sufi, 24, and Mohammed al-Aqra, 38.

Their deaths came just hours after a volley of rockets fired from the Sinai targeted the Israeli Red Sea resort of Eilat, a rare assault from Egypt, which is one of just two Arab states that have signed a peace treaty with Israel.

Three rockets were intercepted by Israel's Iron Dome air defence system and a fourth fell short of the town.

The Sinai is a stronghold of jihadists loyal to the Islamic State group who have waged a long-running insurgency against the Egyptian security forces but attacks on Israel are rare.

In the past, a labyrinth of smuggling tunnels linked the Sinai with Gaza. But since the 2013 overthrow of Islamist president Mohammed Morsi after a single year in power, Egyptian authorities have moved to destroy them and have set up a wide no-go zone on the Gaza border.

Qudra said five people were also wounded in what he said was an Israeli strike.

Israeli army chief spokesman Lieutenant Colonel Peter Lerner said: "Military officials denied Israel Defence Force involvement in the reported strike."

Under the 1979 peace treaty between Egypt and Israel, there are restrictions on military deployments on the Sinai border monitored by international peacekeepers.

But since the jihadists launched their deadly insurgency in the wake of Morsi's ouster, Egypt has poured troops and police into the peninsula with the blessing of Israel and Western governments.

Hundreds of Egyptian security personnel have been killed, particularly in the north Sinai near the Gaza border.

There have been periodic attacks into Israel.

In 2011, assailants who came from the Sinai killed eight Israelis in a triple ambush north of Eilat. Pursuing Israeli forces killed seven attackers and five Egyptian police.

In 2013, four jihadists were killed by an Egyptian air strike as they were about to fire a rocket at Israel, according to the Egyptian military.

And in 2014, two patrolling Israeli soldiers were wounded by unidentified men who fired an anti-tank weapon from the Sinai during an attempted drug-smuggling operation, according to the Israeli military.

In 2015, rockets fired from Sinai hit southern Israel without causing casualties. IS claimed responsibility.