The encounter broke out in Padgampora village after security forces launched a cordon and search operation at around 2.30 AM following information about presence of militants there, a police official said.
The militants, holed up in two adjacent houses, opened fire at security personnel at around 4.40 AM and the troops retaliated, triggering a fierce gunbattle which lasted nine hours.
The security officials had brought the mother of one of the militants to the site to persuade him to surrender but he refused, he said.
A 15-year-old civilian -- Amir Nazir Wani -- was also killed after he suffered a bullet wound in the neck during the cross-firing, he said.
While local residents claimed security forces fired at the protesters near the encounter site, leading to Wani's death, police officials said the teenager was fatally injured by a "stray bullet".
Another youth -- Sajad Ahmad Bhat -- was injured after he was hit by a bullet in the hip. He has been referred to Bone and Joint Hospital here for treatment.
Meanwhile, Army's Director General of Military Operations (DGMO) Lt Gen AK Bhatia today spoke to his Pakistani counterpart and conveyed India's concerns over movement of terrorists along the Line of Control in Jammu and Kashmir.
"The DGMO spoke to the Pakistan Army DGMO this morning. He expressed concern regarding the movement of terrorists noticed along the Line of Control (LoC)," Army sources said.
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