JERUSALEM (Reuters) - Israel on Sunday returned to Egypt two stolen sarcophagi lids, saying the repatriation of the millennia-old artefacts was a sign of warmer relations between the two countries.

Israel Antiquities Authority investigators found the two artefacts, one dating back between 3,400 and 3,600 years and the second about 3,000 years-old, in an antiquity dealer's shop in East Jerusalem about five years ago.

The Israeli foreign ministry said the wooden sarcophagi covers were stolen in Egypt and smuggled to East Jerusalem via a Gulf state.

Israeli authorities seized the artefacts but their return was put on hold after Egypt's Islamist government in 2012 recalled the Egyptian ambassador during fighting between Israel and Palestinian militants in the Gaza Strip.

After a three-year hiatus, Egypt, now ruled by Western-backed President Abdel Fattah al-Sisi, sent a new ambassador to Israel in January. The envoy formally took possession of the sarcophagi at a ceremony on Sunday at the foreign ministry in Jerusalem.

"The return of the Egyptian (artefacts) is symbolic, more than anything, of the changing relations (between) Israel and Egypt," Israeli Foreign Ministry Director-General Dore Gold told Reuters.

Egyptian ambassador Hazem Khairat said the two countries, which signed a peace treaty in 1979, were still working on the return of other artefacts but he did not specify what they were or how many other items were in Israeli possession.

(Writing by Ori Lewis; Editing by Jeffrey Heller and Mark Potter)