At least 44 people were wounded in a powerful explosion near a restaurant and a bank in the town of Bandipora, 60 kilometres north of Srinagar, the Kashmiri summer capital.

"Preliminary investigations suggest that militants triggered an improvised explosive device (IED) attached to a bicycle or scooter near the restaurant," a police spokesman said, adding bomb experts were collecting samples at the scene.

Police said the impact of the blast smashed window panes in the area and was felt up to two kilometres away.

The injured included five border guards, two policemen and four women, the spokesman said, adding six seriously injured people were rushed to Srinagar's main hospital, where one of the injured died.

The area was sealed by security forces and a search operation launched to find the attackers.

A lesser-known Islamic militant group al Mansoorain claimed responsibility for Bandipora explosion, the group's spokesman Abu Shakir told a local news agency, Current News Service.

He claimed five Indian border guards and two army soldiers were either killed or seriously injured in the explosion.

Shakir said his group would continue such attacks in the coming few days "with a view to disrupt Indian Independence Day celebrations."

In a separate incident, eight civilians were injured Wednesday in the Qaimoh area of Kulgam township, 70 kilometres (43 miles) south of Srinagar when militants hurled a grenade at a Border Security Force (BSF) patrol.

It missed its target and exploded among passers-by, police said.

One of the injured later died on way to the hospital.

Meanwhile, suspected rebels hurled a hand grenade at the house of law-maker Ghulam Hassan Khan in the southern town of Shopian, which hit the target but did not explode, police said.

It was later defused by the bomb experts.

Another IED explosion occured on the lawns of a government department building in northern Baramulla town Wednesday, police said, adding that there were no casualties.

Police reported two more explosions in north Kashmir.

Indian troops, meanwhile, shot dead two Muslim rebels in the northern district of Kupwara overnight, a police spokesman said, adding the fighting was reported near the Line of Control (LoC) -- the defacto border dividing Kashmir between India and Pakistan.

Two more rebels were shot dead by Indian troops in two encounters yesterday in southern Pulwama and Anantnag districts, police said.

A civilian who strayed into the crossfire was also killed during one of the gunbattles.

Indian troops also arrested Ghulam Hassan Mir, a self-styled company commander of dominant rebel group Hizbul Mujahedin in the Chowkibal area of Kupwara district, police said.

"Some arms were seized from him," a police spokesman said.

Violence usually increases in the run up to Independence Day on August 15, which is observed as "black day" by anti-Indian rebels and separatists.