SRINAGAR, India, July 2 (Reuters) - An army officer and seven separatist guerrillas were killed in a fierce gun battle in Indian Kashmir, an army spokesman said on Wednesday.

The firefight started on Tuesday in Kupwara sector in north Kashmir, very near to the "line of control" that divides Kashmir between India and Pakistan.

"The operation is still continuing and we think more terrorists are hiding in the forest," Umamaheswar, an Indian Army spokesman who goes by one name said. An army officer was among the eight killed, he said.

India accuses Pakistan of arming, training and sending militants to its part of Kashmir, a charge Islamabad denies.

Tens of thousands of people have been killed since a revolt against Indian rule broke out in 1989.

Officials say violence involving Indian troops and separatist militants has declined in Kashmir since the two south Asian neighbours, who have fought wars over the region, began a slow-moving peace process in 2004. Both claim the region in full but rule in parts. (Reporting by Sheikh Mushtaq, Editing by Bappa Majumdar and Alex Richardson) (For the latest Reuters news on India see: http://in.reuters.com , for blogs see http://blogs.reuters.com/in/ )

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