Egypt has seized a large weapons consignment, including Grad rockets, that had been smuggled from Libya and could have been headed to the Gaza Strip, press reports said on Saturday.

The haul, which included 138 Grad rockets and a further 139 Grad warheads, was made in the Mediterranean coastal town of Marsa Matruh, not far from the Libyan border, Egyptian newspapers reported.

The interior ministry said that police were searching for two men suspected of trafficking weapons "to the Sinai Peninsula or towards Palestine."

Libya has been awash with weapons since last year's armed rebellion which led to the ouster and killing of veteran dictator Muammar Qadhafi, and Egyptian authorities have made a string of seizures near the porous desert border.

On 10 May, the security forces said they had seized a large cache of weapons, including 50 rockets, in Marsa Matruh.

Israel has expressed concern that such shipments are intended for the Hamas-ruled Gaza Strip, through the extensive network of smuggling tunnels under the Egyptian border.

It has also voiced concern that Islamic militant groups might be taking advantage of what it sees as the growing lawlessness of the neighboring Sinai.

Sinai was restored to Egypt as part of the 1979 peace agreement between the two countries, which also placed restrictions on the forces Egypt could place in the peninsula.