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The militants have also assassinated individuals the group considers spies for the government or religious heretics.
Egypt has also faced attacks by militants in its Western Desert.
The startling bloodshed in the town of Bir al-Abd also wounded at least 109, according to the state news agency, and it offered the latest sign that, despite more than three years of fighting in Sinai, the Egyptian government has failed to deter an IS-led insurgency.
President Abdel-Fattah el-Sissi vowed that the attack "will not go unpunished" and that Egypt would persevere with its war on terrorism.
Relatives lined up outside a nearby hospital as ambulances raced back and forth.