Several people were injured when a gunfight broke out in the heart of Indian Kashmir's main city on Sunday near a public rally, witnesses said.
Hundreds of people had gathered to attend a rally organised by the ruling Congress party.
"I saw some policemen bleeding and hundreds of Congress party workers were lying down on the ground," a photographer at the scene said.
Security forces have cordoned off the area where senior state ministers were present. Chief Minister Ghulam Nabi Azad was scheduled to address the rally but had not arrived when the gunbattle started.
Witnesses said they also heard some explosions. Live television footage showed hundreds of people fleeing the area in panic and security men with automatic weapons were seen firing.
Islamist militant groups Al-Mansoorian and Lashkar-e-Taiba (Army of the Pure), called up a local news agency Current News Service claiming responsibility for what they said was a suicide attack.
Islamist militants threatened on Saturday to disrupt a Kashmir peace conference in the disputed Himalayan region next week that will be chaired by Indian Prime Minister Manmohan Singh.
The meeting is the second such gathering since February. It has been called by New Delhi to widen the dialogue process in Jammu and Kashmir, where a separatist revolt against Indian rule by Muslim militants since 1989 has killed more than 45,000 people.
Singh is scheduled to attend the meeting in Srinagar, the summer capital of the region, on the opening day, May 24.
Violence involving separatist guerrillas and soldiers continues in the region despite a peace process between India and Pakistan, which have fought two of their three wars over Kashmir since they won freedom from Britain in 1947.