(Reuters) - A rocket fired from Egypt´s Sinai desert struck the southern Israeli resort of Eilat on Thursday, police said, fuelling Israeli worries over militant activity in the border area.

No casualties or damage were reported.

An Egyptian security source told Reuters in Cairo that Egyptian forces were searching the area along the border but had not found any evidence indicating any rockets had been fired from the Sinai.

The head of Eilat police, Ron Gertner, told Israeli Army Radio that explosions were heard in Eilat soon after midnight. Police found the remains of one rocket in a construction site, about 400 meters (yards) from a residential area.

Asked if the rocket was fired from Sinai, Gertner said: "Based on our working assumptions and the range, yes."

Officials in Israel have been worried that the Sinai has become a base for Islamist militants since former Egyptian President Hosni Mubarak´s downfall last year.

"For a long while now we have been seeing that the Sinai peninsula is turning into a launching ground against the citizens of Israel, for terror," Prime Minister Benjamin Netanyahu said after the attack.

It was launched a day before the start of the Jewish Passover holiday, which commemorates the exodus of the biblical Israelites from slavery in Egypt. Eilat is expected to be full of vacationers during the week-long holiday.

The Israel-Egypt border had been relatively quiet since the two countries signed a peace agreement in 1979. But Israel says that since Mubarak was overthrown, Cairo has lost its grip on the Sinai and militants are exploiting the lawlessness.

Last August, armed infiltrators killed eight Israelis on the Egyptian frontier. Israel´s forces, repelling the gunmen, killed five Egyptian border troops. Israel said the attack was orchestrated by Palestinian militants.

To fend off infiltration, Israel is building a fence along the southern border which it hopes to complete by the end of 2012. When it is finished, the barrier will run most of the 266 km (165 miles) from Eilat on the Red Sea´s Gulf of Aqaba up to the already-closed Gaza Strip on the Mediterranean.

"We are building a very impressive security fence, but it doesn´t block rockets. We will also find a solution to the rocket problem. We will hit those who come to hurt us and we will also hit those who send them," Netanyahu said in a speech in central Israel.

(Additional reporting by Yusri Mohamed in Ismailiya; Writing by Maayan Lubell; Editing by Angus MacSwan) (© Thomson Reuters 2012. 04/05/12)