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SRINAGAR, India, Oct 6 (Reuters) - Indian soldiers shot dead three suspected militants who tried to raid an army base in northern Kashmir on Thursday, police said, the latest in a wave of attacks that has raised tensions with neighbouring Pakistan.
The three men were found in an orchard near the army base in Kupwara district near the Line of Control, the de facto border that divides the Himalayan region between India and Pakistan.
Police superintendent Ghulam Jeelani said the attackers engaged in heavy firing with soldiers before they retreated from the base, the second to be attacked in days in northern Kashmir.
The attack came as India and Pakistan exchanged more gunfire across the de facto border in Kashmir, despite a 2003 ceasefire, setting off panic among residents in border areas.
Tensions have escalated sharply since last week, when India announced its special forces had carried out a strike against militants camped on the Pakistan side of Kashmir and inflicted significant casualties.
Pakistan denied such a strike had taken place but vowed to retaliate against any Indian aggression.
The latest round of tensions between the nuclear-armed neighbours over Kashmir began after militants killed 19 soldiers in an army camp, the deadliest toll in nearly two decades.
India said the attackers had come from Pakistan but Islamabad demanded credible proof.
On Wednesday night, militants from Pakistan unsuccessfully tried to breach the Line of Control at two points in the Nowgam sector and one at Rampur, an Indian army spokesman said.
Another army officer said: "Troops were on alert and fired at the infiltrators, they fled back to Pakistan. A search has been launched."
Pakistan denies sending fighters to Kashmir but says it gives moral and diplomatic support to the Kashmiri people in their 27-year struggle for self-determination.
The two sides traded artillery fire across the Line of Control in Nowshera, Pallanwala and Mendhar sections overnight, the Indian army said.
Twenty shops were gutted in Sabjiyan sector when a shell landed, Poonch deputy commissioner Mohammad Haroon Malik said.
"People are terrified. They are demanding underground community shelters to protect themselves from firing," he said. (Editing by Sanjeev Miglani and Paul Tait)