The search operation was launched late last night after some terrorists reportedly escaped from custody in Peshawar, the capital of Khyber-Pakhtunkhwa province.
While authorities were tight-lipped on the development, residents of the city posted messages on Twitter about heightened security and the "curfew-like" situation prevailing in Peshawar.
Officials were quoted by TV news channels as saying that three terrorists and two security personnel were killed during the overnight search operation.
No further details were immediately available.
Footage on television showed armed soldiers blocking roads and checking all cars and motorcycles.
The soldiers also blocked off traffic in some areas.
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