CAIRO (Reuters) - Egypt announced plans to develop a region bordering Israel on Monday after Israeli officials blamed its loosening grip on the area for the killing of eight Israelis by armed militants, inflaming tensions between the two neighbours. Five Egyptian security personnel died when Israeli troops repelled the gunmen following the attack near Israel's Red Sea resort of Eilat on Thursday. Egypt said Israel's actions breached their 1979 peace treaty. Israel said the gunmen had entered the country by crossing from Gaza and through the Egyptian Sinai. Cairo has struggled to assert its grip on the isolated desert peninsula, especially after the overthrow of President Hosni Mubarak in February left a power vacuum that was quickly exploited by a local population resentful of the government in Cairo. Israel expressed its regret for the Egyptian deaths and said it was investigating the incident, but pressure was growing in Egypt for sterner sanctions.