By Abu Arqam Naqash

MUZAFFARABAD, Pakistan, Sept 4 (Reuters) - Hundreds of Kashmiri militants and refugees from Indian-ruled Kashmir rallied on the Pakistani side of the disputed region on Thursday, vowing a Muslim holy war to free their homeland from India.

"Our path, our aim is jihad," shouted protesters led by Syed Salahuddin, head of the main Kashmiri guerrilla group, Hizb-ul-Mujahideen, as they marched through the streets of Muzaffarabad, capital of Pakistan-controlled Kashmir.

Armed guards escorted Salahuddin as he made victory signs and chanted slogans along with protesters while he was driven through the city in an open-topped jeep.

"Let it be clear to the whole world that unless every single inch of Kashmir is liberated from the Indian yoke, our struggle will continue with full force," he said in a speech.

"Until India ends the economic blockade of Kashmir Valley, lifts the curfew, halts atrocities and acknowledges the disputed status of the region, Pakistan should stop all relations with India," he said.

Pakistan and India have fought three wars, two of them over Kashmir, since they gained independence from British rule in 1947. Both claim Kashmir in full but rule it in parts.

A nine-day curfew that had been imposed to quell widespread anti-India rallies in Indian-controlled Kashmir was lifted on Tuesday as the Muslim fasting month of Ramadan began.

At least 35 protesters in Indian-held, Muslim-majority Kashmir Valley were killed by Indian security forces during some of the largest pro-independence demonstrations since a revolt against Indian rule broke out in 1989.

Salahuddin described the peace process launched by nuclear-armed India and Pakistan more than four years ago as a "meaningless exercise".

Leaders from several other militant groups, including the banned Lashkar-e-Taiba, also addressed the rally.

Abu Saad Shabbir, a Lashkar leader, also called for jihad, or Islamic holy war, in the region to break India's hold.

Relations between India and Pakistan had improved after the peace process was launched but Indian Prime Minister Manmohan Singh said last month it was under threat after attacks against Indian interests New Delhi blames on Pakistan's main spy agency.

Pakistan has denied involvement.

Until a few weeks ago the two armies had largely stuck to a ceasefire agreed in late 2003. Lately there have been several exchanges of fire across the Line of Control, the de facto border dividing Kashmir. (Editing by Zeeshan Haider and Paul Tait)

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