Police fear higher Sinai migrant death toll

* Migrants were being held for ransom

* More bodies to be discovered, source says

ISMAILIA, Egypt, Aug 15 (Reuters) - Smugglers may have killed as many as 10 African migrants in an armed battle near the Egyptian-Israeli border last week and dozens more could be lost in the desert, Egyptian security sources said on Sunday.

The Sinai peninsula is a major transit route for African migrants and refugees seeking work or asylum in Israel. It also is used by smugglers to ferry narcotics and weapons into Israel and a range of goods into the besieged Gaza Strip.

At least four migrants were killed on Friday after they stole weapons from smugglers who had been holding them for ransom and tried to escape. Egyptian police later gunned down at least two more migrants trying to cross the border.

Egyptian police suspect the death toll among the migrants may be as high as 10 following Friday's shooting, with more bodies still to be discovered, a security source who asked not to be named said.

The smugglers had been holding about 50 Ethiopians and Eritreans for ransom and dozens of the escaped migrants are still missing, the source said.

"A number of the migrants might die of thirst as many are believed to have lost their way in the desert," the source said.

The violence brings the number of migrants killed near the Egypt-Israel border this year to at least 28, up from 19 in 2009. Twenty-four of those killed this year were shot dead by Egyptian security forces and four by smugglers.

(Reporting by Yusri Mohamed; Writing by Dina Zayed and Alexander Dziadosz in Cairo; Editing by Michael Roddy)