Security forces have stormed a hotel in Indian-administered Kashmir taken over by separatist militants, say officials.
On Thursday civilians were killed by a bomb on a bus
Three policemen and one suspected militant were also killed during the clashes in the border town of Poonch.
The militants took over the hotel, in the heart of the town, after opening fire on a market.
Officials say three civilians also died in the incident.
State Director General of Police, AK Suri said a militant was killed after the security forces entered the building and opened fire.
He said no other militants were found inside the building which was taken over by the security forces.
Ten people including four police officers were injured and taken to hospital.
The Jamiat-ul-Mujahideen group has claimed responsibility for this incident.
A spokesman for the group said this attack was aimed at the police.
Police say more than 20 people were rescued from inside the besieged hotel and the main markets in Poonch have closed down.
It is the latest in a spate of killings in Indian-administered Kashmir.
Also on Friday, the army in Indian-administered Kashmir said its troops killed five separatist guerrillas in incidents south of the summer capital, Srinagar.
An army spokesman said two militants of the Jaish-e-Mohammad group died in a shoot-out in the town of Magam.
He said three other militants were killed in the village of Bona-ahalan.
Friday's fighting began after the army raided militants' hideouts.
Change of tactics
On Thursday a bomb blast on a bus left four people dead and many others injured.
The bomb was placed inside a passenger bus and exploded minutes before it was to leave the border town of Rajouri for the Kashmir winter capital, Jammu.
The BBC's Jill McGivering in Delhi says civilians in the Jammu area have become targets, after an apparent change of tactics by militants.
Previously the Kashmir Valley was the main focus of the violence and Indian security forces were the main targets.
Tens of thousands of people have died in more than a decade of violence in Indian-administered Kashmir.
India accuses Pakistan of actively backing the separatist militants, a charge Islamabad denies.
Tension over Kashmir brought the two nuclear neighbours close to an armed conflict last year and relations have remained strained since.