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Three militants and a policeman were killed in a fierce gun-fight in the Qamarwari locality of Srinagar on Monday afternoon.
Motorcycle borne militants opened indiscriminate fire at a naakabandi, after being intercepted on the Srinagar Muzaffarabad highway, just six kms from the city centre Lal Chowk on Monday afternoon, said a police officer.
"A policeman died on the spot while the other cops manning the naaka returned the fire, killing all three militants," he said.
Reports said the gunfight continued between the militants and the police for some time, causing wide-scale panic in the busy highway market place.
The naaka had been set up by the police on Monday morning after they received information about the movement of militants.
The area has been surrounded by security forces.