The Israeli military says Egyptian troops have killed two smugglers who attempted to enter Israel.
The military says a patrol identified the group along the border with Egypt and fired warning shots toward them. The smugglers fled into Egypt along with Arab contacts from the Israeli side.
Egyptian officials confirmed killing one Egyptian Bedouin and one Israeli Arab.
The largely lawless Sinai Peninsula has become a staging ground for smuggling of arms, drugs and migrant workers into Israel.
Israel is building an electronic barrier along the 230-kilometer (150-mile) border with Egypt to keep out militants and migrants.
Before the border incident Tuesday, Israeli Prime Minister Benjamin Netanyahu visited the barrier and pledged to have it completed soon.