Government troops surrounded a residential neighbourhood
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Four soldiers have been killed in a gun battle with rebels in Srinagar, the summer capital of Indian-administered Kashmir, police say.
A local commander of the Pakistan-based militant group, Lashkar-e-Taiba, was also reported killed and three other soldiers were wounded in the fighting.
The fighting broke out after troops raided a militant hideout.
The violence comes days after rebels detonated a powerful bomb in Srinagar, killing one person and wounding 12.
Officials said the gunfight had started on Sunday morning after government troops received a tip-off that militants were in the area and surrounded a residential neighbourhood.
"Militants hiding in a house fired indiscriminately," Srinagar police chief Syed Ahfadul Mujtaba told Reuters news agency.
Islamists militants have been fighting a nearly two-decade old insurgency in Kashmir.
India and Pakistan each hold part of the region and claim it in its entirety.
India has frequently accused Pakistan of sponsoring the insurgency - a charge Pakistan denies.
More than 60,000 people have been killed since the insurgency began in 1989.
The level of violence has decreased since Delhi and Islamabad embarked on a peace process in 2004.
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