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The clash took place over an area of operation in Doda district.
The foreign mercenaries-dominated LeT has an upper hand in Rajouri and Poonch districts while Doda is dominated by Hizbul Mujahideen militants.
Panic gripped the entire area following the heavy firing and the exploding of grenades, sources said.
Seven militants - six of the Hizb and one of the LeT - were killed in the clash, Doda's Senior Superintendent of Police Vijai Singh Samyal said, adding three ultras were injured.
The dead Hizb militants have been identified as area commander Shaheen Kashmiri, Ishtiyaq Ahmed Lone (codename Capt Abrar), Gulzar Ahmed alias Hazari of Nawapachi, Ansari of Kishtwar and Afaq. One militant is yet to be identified.
The lone LeT militant killed is Altaf, a native of Pakistan.
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