ISLAMABAD (AFP) - Pakistani and Indian troops exchanged fire on Sunday along their hotly disputed border in divided Kashmir, with each side accusing the other of starting the clash.

Pakistan said one of its soldiers was killed and another wounded when Indian troops crossed the de facto border and stormed a military post, an accusation denied by the other side.

A Pakistani military statement said the Indian troops came across the frontier known as the Line of Control in the Haji Pir sector, 80 km north of Islamabad, and "physically raided" a checkpost named Sawan Patra.

"Pakistan Army troops effectively responded to the attack successfully. One Pakistani soldier embraced martyrdom while another was critically injured," it said in a statement.

The Indian troops retreated, leaving behind a gun and a dagger, the military said.

An Indian army spokesman in Srinagar, the summer capital of the Indian-administered part of Kashmir, denied its troops crossed the border.

Colonel Brijesh Pandey accused the Pakistani military of firing mortar bombs into a village in the Uri district in Indian Kashmir, which faces Haji Pir in the Pakistani sector of the territory.

"At 3:15 am today (2145 GMT Saturday) Pakistani troops resorted to heavy mortar firing, targeting a village in Uri sector," Pandey told AFP, adding that the homes of some villagers were damaged.

"We retaliated with small arms and the exchange continued for over an hour," the spokesman said.

He said no Indian troops were hurt but had no information about any Pakistani casualties.

Muslim-majority Kashmir is a Himalayan region which India and Pakistan both claim in full but rule in part. It was the cause of two of their three wars since independence from Britain in 1947.

The nuclear-armed neighbours have observed a ceasefire in Kashmir since November 2003 but there have been occasional small-time clashes and accusations of truce violations from both sides.

Last month officials in Pakistani-administered Kashmir said cross-border fire from Indian troops killed a man and wounded three other civilians in two villages.

India suspended its peace process with Pakistan after deadly attacks by Pakistan-based militants in 2008 in Mumbai. Talks only resumed in February last year.

Both sides remain deadlocked over Kashmir but have made some progress on less contentious subjects such as trade.

Kashmir has been racked by militancy since 1989 when an insurgency against Indian rule erupted. Around 47,000 people have died, though militant violence has decreased in recent years.