MARAWI CITY, Philippines (Reuters) - The Philippine military found methamphetamine worth between US$2 million and US$5 million (S$2.77 million and S$6.91 million) while clearing rebel positions in besieged Marawi City, officials said on Monday, boosting suspicions Islamist militants are being funded by the narcotics trade.

The 11 bags of shabu, the local name for methamphetamine, were recovered on Sunday (June 18) along with four assault rifles in the kitchen of a two-storey concrete house believed to be occupied by fighters from the Maute militant group. "This strengthens our findings that these terrorists are using illegal drugs," Major-General Carlito Galvez, military commander of western Mindanao, said in a statement.

President Rodrigo Duterte, who launched a ruthless 'war on drugs' after coming to power a year ago, has said the Marawi fighters are being financed by drug lords in Mindanao, an island the size of South Korea that has suffered for decades from banditry and insurgencies.

Fighting in Marawi City erupted on May 23 after a bungled raid by security forces on a Maute hideout, with gunmen owing allegiance to Islamic State in Iraq and Syria (ISIS) seizing bridges and buildings and taking hostages.

Duterte responded by declaring martial law in Mindanao.

The army said nearly 350 people, including 257 militants, 62 soldiers and 26 civilians, have been killed in four weeks of fighting.

The fighters were prepared for a long siege of Marawi, stockpiling arms and food in tunnels, basements, mosques and madrasas, or Islamic religious schools, military officials have said.

Bundles of banknotes and cheques worth about US$1.6 million were also discovered earlier this month in an abandoned rebel position.

Jo-Ar Herrera, a military spokesman, told a media briefing the militants were also using commercial drones to monitor troop movements.