Indian and Pakistani forces continued their fierce artillery barrages in the divided Himalayan territory of Kashmir, with both sides accusing the other of initiating the deadly shelling.

Indian police on March 2 said a mother and two children were killed overnight after a shell fired by Pakistani soldiers hit a home near the Line of Control (Loc) that divides the bitter nuclear rivals in the Muslim-majority Kashmir region.

The family members – a 24-year-old woman, her 5-year-old son and 9-month-old daughter -- were killed in the Krishna Ghati sector of Poonch, said a senior police official.

The Indian military said its forces returned the fire.

A police official told AFP that Indian troops also surrounded a house in Handwara district of Kashmir after believing they had killed two militants inside.

However, the official said, one of the insurgents survived, and when security forces went in to retrieve the bodies, the man opened fire, killing four soldiers before he was shot dead.

The official said a civilian was killed in later protests over the clash.

Meanwhile, Umar Azam, a Pakistani government official, on March 2 said Indian troops with heavy weapons "indiscriminately targeted border villagers" along the LoC, killing a boy and wounding three others.

He added that Pakistani troops were "befittingly" responding to the Indian shelling.

The exchange of artillery fire came despite some signs of an easing of the latest crisis between the two bitter rivals.

On March 1, Pakistan released a captured Indian pilot in what its prime minister said was a “peace gesture.”

Pakistan's military said its air force shot down two India Air Force jets in its airspace and captured a pilot on the ground in Pakistan-administered Kashmir on February 27.

India confirmed the loss of one of its MiG-21s and the capture of its pilot. It said it also foiled an attack by Pakistan warplanes over Kashmir and shot down one Pakistani plane. Islamabad denies any of its aircraft were shot down.

The aerial confrontation came after India on February 26 struck what it said was a militant camp in northeastern Pakistan in retaliation for a suicide bombing that killed at least 41 Indian troops in the India-controlled part of Kashmir.

Pakistan and India have fought two of their three wars over Kashmir since their independence from British rule in 1947. Both sides claim all of the divided territory.

With reporting by AP, AFP, ANI, and Times Now