A leading separatist has been shot dead in Indian-administered Kashmir, just as Indian Prime Minister Atal Behari Vajpayee landed in the disputed region.

Abdul Ghani Lone, a senior figure of Indian-administered Kashmir's main separatist alliance, the All Party Hurriyat Conference, was shot while speaking at a rally in Srinagar, Indian Kashmir's summer capital.

Lone: A moderate among the separatists

Tensions between India and Pakistan have soared since more than 30 people were killed in an attack on an army camp near Jammu last week, which India blamed on Pakistan-based militants.

Heavy shelling between the two sides over their border in Kashmir continued for a fifth straight day on Tuesday.

At least three civilians were killed and seven injured in the latest exchanges, an Indian army spokesman said. Pakistani police said a 10-year-old had died in the firing.

Shares on the stock exchange in Bombay have fallen sharply, in expectation of hostilities breaking out. Karachi had its biggest daily fall in nearly four years on Monday.

UN Secretary General Kofi Annan has called on India and Pakistan to exercise restraint.

Mr Vajpayee, who touched down at a military airport in Jammu, will inspect part of the Kashmir front line during his three-day visit, where many of nearly a million troops from both sides have been facing each other since December.

India has announced it is moving troops from Gujurat back to the border with Pakistan.

Religious violence in the state had prompted the deployment of 1,300 soldiers there in March.

"They are going back to the operational areas because they are no longer required for deployment in the cities," said an Indian army spokesman.

War of words

Pakistan has urged the international community to "convince India to see reason", and appealed for talks with Delhi to defuse the situation.

Vajpayee has ruled out talks

Pakistani foreign ministry spokesman Aziz Ahmed Khan said his government was keeping foreign governments, the United Nations and other organisations fully informed and was ready to accept foreign intervention.

India said it would try bring pressure to bear on Pakistan by "sensitising the world community" about what it claimed were Pakistan-backed attacks.

India has said it will not negotiate with Pakistan until Pakistani leader Pervez Musharaf acts on a pledge he made in January to crack down on militants opposed to Indian rule in Kashmir.

Cross-border fighting

Indian and Pakistani forces pounded each other across the Kashmir frontier for a fifth consecutive day on Tuesday.

A war could escalate out of control

The civilian deaths occurred in Rajouri, a Kashmir district on the international border, an Indian army spokesman said.

A day earlier at least 12 people were killed and about 70 wounded on both sides.

Indian officials said more than 12,000 Kashmiris had been displaced by Pakistani firing and shelling since fighting intensified.

US involvement

The international community, especially the United States, is worried about the conflict escalating out of control, and has urged both sides to exercise restraint.

The US has said it will send Deputy Secretary of State Richard Armitage to visit India and Pakistan, although no date has been set.

General Musharraf faces difficult demands

Washington is concerned that conflict in South Asia will detract from its "war against terrorism".

However, correspondents say a recent trip by Assistant Secretary of State Christina Rocca exposed the limited effect of pressure from foreign friends.

The BBC's South Asia correspondent Adam Mynott says there is a belief in Delhi that Pakistan has profited from its involvement in the international coalition against terrorism while, at the same time, sponsoring militant activity against India.

India accused Pakistan of sponsoring last week's attack, threatened to take "appropriate measures", and expelled the Pakistani envoy from Delhi.

Pakistan denied the allegation but reiterated its support for the "freedom struggle of the Kashmiri people", and tightened security measures with deployments of weapons and troops in major cities.