Indian commandos carried out a series of lightning strikes Thursday along the de facto border with Pakistan in Kashmir, provoking furious charges of "naked aggression" from its nuclear-armed neighbour.

Amid anger in India over a recent deadly assault on one of its army bases in Kashmir, officials said troops had conducted "surgical strikes" several kilometres (miles) inside the Pakistan-controlled side of the disputed territory to prevent attacks being planned on major Indian cities.

The strikes aimed at "neutralising the terrorists" had caused "multiple casualties", according to Indian officials.

Pakistan said two of its soldiers had been killed and nine more wounded in what it described as small arms fire and dismissed the talk of surgical strikes as an "illusion" designed to whip up "media hype".

Lieutenant General Ranbir Singh, director-general of military operations, announced news of the strikes in New Delhi, sending shares on the Indian stock market sliding nearly two percent.

"Some terrorist teams had positioned themselves at launchpads along the Line of Control," Singh told reporters.

"The Indian army conducted surgical strikes last night at these launchpads. Significant casualties have been caused to these terrorists and those who are trying to support them."

Singh said the decision to launch the strikes was taken following intelligence that militants were planning "to carry out infiltration and terrorist strikes in Jammu and Kashmir and various other metros" in India.

A senior government source said commandos carried out the strikes some way across the unofficial border known as the Line of Control (LoC), beginning after midnight and finishing before dawn.

"They were conducted two-three kilometres across the LoC," the source told AFP on condition of anonymity.

"Seven launchpads were targeted. The defence minister himself monitored the ops and the Indian side did not suffer any casualties."

Another Indian government official source put the number of dead on the Pakistani side in "double digits".

Most of the casualties were "terrorists", said the source, insisting India had not been targeting the Pakistani army.

- 'Naked aggression' -

Pakistan's Defence Minister Khawaja Asif said two Pakistani soldiers were killed and nine wounded as authorities in Islamabad played down the scale of the strikes.

"There has been no surgical strike by India, instead there had been cross border fire initiated and conducted by India," said a military statement.

"As per rules of engagement same was strongly and befittingly responded by Pakistani troops."

Pakistani Prime Minister Nawaz Sharif "strongly condemned the unprovoked and naked aggression of Indian forces".

Islamabad later summoned the Indian High Commissioner to voice its anger at the operation, the Pakistani foreign ministry said.

Tensions between the two arch rivals have been boiling since the Indian government accused Pakistan-based militants of launching an assault on an army base in Kashmir earlier this month that killed 18 soldiers.

India has also been on a diplomatic drive to isolate nuclear-armed Pakistan since the raid on September 18, the worst such attack in more than a decade.

On Tuesday India said Prime Minister Narendra Modi would not attend a regional summit in Islamabad in November in a major snub to its neighbour.

Ashok K Mehta, a retired major general in the Indian army, said it was the first time in a decade that officials in New Delhi had acknowledged its troops had crossed into the Pakistani side of the LoC.

"We have to see whether the Pakistani army will respond in kind... Now the the ball is in Pakistan's court if they want to escalate things."

Residents on the Pakistani side of the LoC were hunkering down over fears the situation could unravel further.

"I did not send my children to school today. The situation is very tense," said Tahir Iqbal, who runs a grocery in the town of Athmuqam.

There was similar foreboding on the Indian side as villagers living along the LoC and the undisputed international border further south in the state were placed on alert to evacuate if required.

Kashmir has been divided between India and Pakistan since they gained independence from Britain seven decades ago.

The Indian-controlled part of the picturesque territory has a Muslim majority and there are a number of armed separatist groups who are fighting to break free from New Delhi.

India has said the attack on the Uri army base in Kashmir was carried out by a Pakistan-based group called Jaish-e Mohammed.

Tensions had already been high in the region since the Indian army killed a leading Kashmiri separatist in a gunfight in early July, sparking a series of protests that have been staged in defiance of curfew orders.

More than 80 people have been killed in the Indian-controlled part of Kashmir since July, many shot by the army at the protests.

Five questions on India's face off with Pakistan in Kashmir
Islamabad (AFP) Sept 29, 2016 - Pakistan responded with fury Thursday after India said it had carried out "surgical strikes" along the Line of Control dividing the disputed territory of Kashmir, as tensions soar between the rival nuclear powers.

Here are five things to know about the conflict.

Why is Kashmir disputed?

Muslim-majority Kashmir has been divided between Pakistan and Hindi-majority India since the end of British colonial rule in 1947 -- but both claim it in full and two of their three wars have been fought over it.

Rebel groups are fighting for independence of the Indian-administered portion of the region or its merger with Pakistan.

Besides the thorny question of religion, the conflict is exacerbated by Kashmir's status as a regional water tower: the mountainous area feeds the Indus river essential for agriculture in both countries.

An insurgency broke out in 1989 and tens of thousands of people have died since, most of them civilians.

Why are tensions flaring now?

Ceasefire violations along the Line of Control are not uncommon.

But the killing in July of a popular young rebel leader in a gun battle with Indian soldiers has led to the worst unrest since 2010 on the Indian side.

Security experts and India's government accuse Pakistan of sending militants across the line to further destabilise the territory.

On September 18, 18 soldiers were killed in a raid on an Indian army base near the town of Uri.

It was the worst such attack in more than a decade and tensions soared -- but while India swiftly blamed a Pakistani militant group, Islamabad denied any role.

Is Kashmir an isolated issue?

No. Pakistan's Balochistan province has been hit by sectarian violence and a years-long separatist insurgency which the Pakistani military has repeatedly claimed is "terrorism" promoted by hostile states such as India.

Pakistan, on the other hand, is widely believed to carry out asymmetric warfare by using militant proxies to launch assaults in India, such as the Mumbai attack in 2008.

In Afghanistan the rivalry spills out into the international arena.

India is one of Afghanistan's biggest international donors and has been a key supporter of the Afghan government. Pakistan, the historic backer of the Taliban, has long been accused of supporting insurgents in the country.

Analysts point to the threat of a "proxy war" in Afghanistan between India and Pakistan.

What does the rest of the world think?

Kashmir, caught between two nuclear powers, is often described as one of the world's biggest flashpoints.

But to many it remains a bilateral issue -- unable to ignite global attention on the level of the Israeli-Palestinian conflict despite the parallels.

"In Kashmir, people are fueled by local grievances -- namely, the brutalities inflicted on them by Indian security forces," says analyst Michael Kugelman at the Woodrow Wilson Center in Washington.

"They don't have much interest in the more global objectives of international terror groups like Al-Qaeda and ISIS," he says, citing failed efforts by Al-Qaeda's South Asia affiliate to recruit Kashmiris.

And, while Muslims suffering abuses at the hands of Hindu security forces could make for a compelling Islamist narrative, Kugelman also argues there is little evidence jihadists use the conflict as a recruiting tool elsewhere.

What happens next?

Pakistan and India have been here before, and likely will again -- but for now, despite hype in the media and online, both must act with restraint, analysts say.

Pakistani defence analyst Shaukat Qadir, a retired army brigadier, said he doubts hostilities will go much further.

"Actually India knows very well that if it did something, Pakistan would respond in some way, and gradually these incidents would turn into an escalation and nobody would be able to control it," he says.