Presidential spokesman Yasser Ali said that Morsi's sister Fatma passed away at the age of 58.
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Prime Minister Benjamin Netanyahu sent Morsi a letter of condolences.
The Egyptian president's sister battled cancer for 10 years and her health deteriorated in the past few months. She was hospitalized at the A-Zagazig University Hospital.
Egyptian website al-Masrawi reported that Morsi arrived at the hospital by helicopter on Tuesday morning to attend his sister's funeral, which will be held at Al the Sharqia district.