SRINAGAR (AFP) - Thousands of protesters clashed with police in Indian Kashmir on Thursday (April 7) after two militants were killed in a gun battle with government forces, the army and witnesses said.

Protesters torched a police armoured vehicle as masked militants fired automatic rifles into the air in honour of the dead men, a police officer at the scene told AFP on condition of anonymity.

The gun battle broke out early Thursday morning in Shopian, 45km south of the main city of Srinagar.

"The militants fired on a patrol party. In retaliation both were eliminated," army spokesman, Colonel N.N. Joshi told AFP.

The two militants were members of Hizbul Mujahideen, the largest local rebel group operating in Kashmir.

After the shootout, thousands of angry villagers came out onto the streets, throwing stones at police and chanting slogans in support of the rebels.

Police fired tear gas at the protesters but later withdrew to avoid an escalation.

The authorities in Kashmir say there has been a rise in violent protests over the deaths of local militants in the restive Himalayan region, which is divided between India and Pakistan but claimed in full by both.

Local police and the army have issued public warnings asking residents within a 2km radius of a gun battle to stay indoors, but the request is usually ignored.

Hizbul Mujahideen is one of several rebel groups fighting an estimated half a million Indian forces deployed in the restive region, seeking independence or a merger with Pakistan.

Tens of thousands have died in the fighting, mostly civilians, since the insurgency broke out in 1989.

Kashmir has been divided between India and Pakistan since their independence from Britain in 1947 and the two neighbours have fought two wars over its control.