Militants have killed 25 Egyptian policemen in the deadliest attack of its kind in years.
It comes as the army-installed rulers escalate a campaign to crush ousted president Mohamed Morsi's Muslim Brotherhood.
The assailants fired rocket-propelled grenades at two buses carrying police in the Sinai Peninsula, sources said on Monday, just hours after 37 Brotherhood prisoners died in police custody.
The incidents came after Egypt's military chief vowed a "forceful" response to violence roiling the Arab world's most populous nation.
The Sinai attack raised fears of a return to the wave of deadly Islamist violence that swept the country in the 1990s.
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Egypt is struggling to put a lid on a deep political crisis and violence that has killed almost 800 people in several days of clashes between Islamist protesters and security forces across the country.
Western countries have condemned the violence and are threatening to cut off billions of dollars in aid to Egypt in response, but Saudi Arabia said on Monday that Arab nations are ready to step in to fill the financial void.
The developments come as judicial sources say former autocratic president Hosni Mubarak, who was toppled in a popular uprising in 2011, has been granted conditional release in one case against him, but that he will remain in custody in an additional case.
Morsi loyalists vowed new demonstrations on Monday, although a day earlier they had cancelled some marches citing security concerns.
The interior ministry said 25 policeman were killed and two injured in the Sinai attack, which it on "armed terrorist groups".
A border official said afterwards that the Rafah crossing with the Palestinian Gaza Strip, near where the attack occurred, would be closed.
