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By Abu Arqam Naqash

MUZAFFARABAD, Pakistan (Reuters) - Three people were killed in disputed Kashmir on Thursday when bitter foes India and Pakistan engaged in cross-border shelling, officials on both sides of the border said, adding to simmering tension between the nuclear-armed neighbours.

The armies face off along the heavily militarised and disputed frontier, known as the Line of Control (LoC), that divides the Muslim-majority Himalayan region.

Indian troops last week said they attacked and damaged Pakistani army posts in Kashmir as they sought to prevent militants infiltrating from the Pakistani side, but Islamabad denied the claim.

Mohammad Usman, a police official in the southern Poonch district of Pakistan-held Kashmir, said the shelling started in the morning. Two civilians were killed and six wounded.

"The civilian population in the vulnerable villages was caught off guard by the unprovoked firing," Usman said. "It was intense."

The Indian army said one person was killed and one wounded on its side of Kashmir, blaming Pakistan for starting the exchange of fire.

"The Indian army posts are retaliating strongly and effectively and the firing is presently on."

Pakistan army's media wing, the Inter Services Public Relations (ISPR), said in a statement: "Indian troops initiated unprovoked firing at Battal, Jandrot and Hotspring sectors at the LoC this morning."

In a separate bout of violence, two militants were killed in North Kashmir’s Sopore area on Thursday, a police spokesman in Indian-held Kashmir said.

(Additional reporting by Fayaz Bukhari; Editing by Drazen Jorgic and Nick Macfie)

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