Exiled Hindus at Kashmir shrine hope to return soon

* Pandits gather at shrine, pray for return

* More optimism now that Kashmir violence is declining

By Sheikh Mushtaq

TULUMUL, India, May 31 (Reuters) - Thousands of Kashmiri Hindus who fled an Islamic insurgency in the Himalayan state 20 years ago, gathered at a holy shrine in the strife-torn region on Sunday to pray for an early return to their homeland.

More than 250,000 Kashmiri Hindus, known as 'Pandits', fled their burning homes when a revolt against Indian rule in Kashmir broke out in 1989.

Since then, migrant Pandits have gathered every year on this day at the white marbled shrine surrounded by huge green chinar trees and shimmering streams to chant hymns and walk barefoot, carrying marigolds, rose petals and earthenware lamps.

Hundreds of gun-wielding police and soldiers guarded the Khirbhawani temple, the holiest shrine of Kashmiri Hindus in the disputed region, as the pilgrims offered prayers.

"We all feel it (peace), the situation has improved very much and we think the time is ripe to return to our motherland," said 55-year-old teacher Awtar Krishan Koul, his optimism springing from a sharp drop in rebel violence in recent years.