A stand-off between militants and security forces in Indian-administered Kashmir has entered its second day. A civilian and a policeman were killed after militants threw a grenade and opened fire in Srinagar on Wednesday.
The hotel in which the two gunmen have taken refuge and exchanged fire with security forces is on fire.
This is the first major militant attack in Srinagar in two years. Violence in Indian-administered Kashmir has declined dramatically in recent years.
The attack took place in the city’s historic Lal Chowk or Red Square area.
The BBC’s Altaf Hussain in Srinagar says that there was a heavy exchange of fire between the security forces and the gunmen early on Thursday morning as the stand-off continued.
Security forces have taken positions on buildings around the hotel in which the gunmen have taken refuge.
They have also rescued 10 people from a neighbouring hotel in what is a crowded business district in the city, our correspondent says.
It is not clear whether the gunmen have taken any hostages in the hotel, the police say.
India and Pakistan declared a ceasefire in 2004, but suspended peace talks after the 2008 Mumbai (Bombay) attacks, which India blamed on Pakistan-based militants.
Separately, at least three soldiers were killed and 11 injured in a suicide bombing outside an army barracks in Pakistani-administered Kashmir on Wednesday.
No group has claimed the attack near the town of Rawalakot. It follows a number of recent attacks on Shia Muslims and the security forces.