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Tahira, 44, sustained injuries during the encounter and was rushed to the district hospital, but she could not be saved, officials said.
Security forces launched a cordon-and-search operation in Brenti-Batpora in Anantnag early today after they received information about the presence of militants, including a top Lashkar-e-Taiba commander there, a police official said.
He said the search operation turned into an encounter after the militants opened fire on security forces.
A police spokesman said the militants were using civilians as human shields and efforts are on to rescue them. The operation was still on.