JERUSALEM -- A shootout along the Israel-Egypt border on Friday, in which three Islamic militants and an Israeli soldier were killed, highlighted the growing threat posed by al-Qaida-inspired groups that have taken hold in the vast desert of the Sinai Peninsula.

The militants were heavily armed and wearing explosive belts when they infiltrated Israeli territory and shot at soldiers protecting a team of workers building a border fence meant to buffer against such attacks, the Israeli military said.

It said the troops quickly returned fire, killing the militants and preventing a major terror attack. During the exchange, Cpl. Netanel Yahalomi, 20, was shot in the head and later died of his wounds. Another soldier was moderately wounded.

Sinai has been demilitarized since Israel returned it to Egypt as part of their 1979 peace deal. For decades it largely remained a quiet oasis and a popular tourist destination for Israelis. But in recent years it has become increasingly lawless and dangerous as rogue groups either inspired by or loosely linked to the al-Qaida global terror network staked out strongholds in the desert.

The Israel-Egypt border has become particularly volatile since the fall of longtime Egyptian ruler Hosni Mubarak last year, with militants staging multiple attacks on a pipeline delivering gas from Egypt to Israel, frequently lobbing rockets into the Jewish state and sneaking across the border and killing Israelis.

Israel has repeatedly warned Egypt's new authorities of the deteriorating situation and the growing militancy in Sinai.

It's unclear who was behind Friday's attack. The Israeli military said the three militants were camouflaged with sand-colored clothes and armed with various weapons -- AK-47 assault rifles, machine guns and rocket-propelled grenades.

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