Muslims in Srinagar protest at the visit of the Indian prime minister
At least two people were killed when police and protesters clashed in Indian-administered Kashmir during a visit by Indian PM Manmohan Singh.
Six others were injured when police opened fire and used tear gas to break up demonstrations in Srinagar after being pelted with stones.
Mr Singh inaugurated a dam in the region that was built despite protests from Pakistan.
On Saturday he will inaugurate Kashmir's first train service.
Mr Singh's visit has triggered widespread protests in the Muslim-majority Kashmir Valley.
The visit comes at a sensitive time in Indian-administered Kashmir which has seen massive protests against Indian rule. Some 30 people have been killed in clashes with security forces since August.
Shops in the Kashmir Valley closed just after midday on Friday as part of the latest protests.
The protesters also burned an effigy of Pakistani President Asif Zardari who was quoted last weekend by the Wall Street Journal as calling militants in Kashmir "terrorists".
'Crucial for development'
Pakistan says the Baglihar hydro-electric project will deprive its farmers of irrigation.
"This dam is key to the state's development," Prime Minister Singh said at the inauguration ceremony on the Chenab river in the Hindu-majority Jammu region.
"Electricity is crucial for the development of industry and the project will give a push to the industrialisation of [Kashmir]."
Sonia Gandhi, president of India's governing Congress party, accompanied Mr Singh.
The Baglihar project will eventually generate a total of 900 megawatts of power.
The project has been mired in controversy. Work started on it in 2000 and it was due to be completed by June 2006.
But after Pakistan raised objections, the work was delayed.
Islamabad argued that the dam violated the World Bank-brokered 1960 Indus Water treaty which divided the rights of water from six rivers between India and Pakistan.
In February 2007, the World Bank overruled most of Pakistan's objections.
At the same time, it told India to lower the height of the dam by 1.5m (five feet).
Some geologists too have expressed concern over the safety of the Baglihar project.
They say it is built over an active fault in an area prone to earthquakes.
The Co-ordination Committee, which has been spearheading the anti-India protests, has called for a "civil curfew" on Saturday.
That is when Mr Singh is due to flag off Kashmir's first-ever train from Nowgam station, near Srinagar.
Many of Pakistan's major rivers, including the Chenab, originate in India
The line will link the town of Rajwansher in the north with Anantnag in the south, a distance of 72km (44 miles).
It will be extended next year to 117km (73 miles) to Baramullah and Qazigund. The eventual plan is to extend the link to connect with India's vast rail network, but that could take years.
"It will be a simple ceremony and it will not be open to public because of security reasons," an official told the BBC.
The rail link will not connect Kashmir with the rest of India for now so its impact on the region's development is expected to be limited.
The Rajwansher-Anantnag link was ready to be flagged off in the summer, but was postponed following the anti-India protests.
After some years of relative calm in the valley, tensions were sparked by a plan to grant land to a board that oversees the running of an important Hindu shrine.