The talks at Prime Minister Manmohan Singh's official residence with moderate leaders of the Hurriyat or "Freedom" alliance are the second since he took office two years ago and have been planned for months.

But the massacre cast a cloud ahead of the meeting.

On Sunday, suspected militants gunned down 35 Hindu villagers in Kashmir in the worst such massacre since 2000.

Analysts warned against high expectations from the talks as troops combed densely forested areas of revolt-hit Indian Kashmir hunting for the killers.

"It's going to be a long haul -- don't expect dramatic results but the fact they have come with no set agenda is a good sign they want to talk," said S. Chandrasekharan, of New Delhi's South Asia Analysis Group.

New Delhi "is not going to be deflected" by the massacre," he added. "If the government stopped talking it would give them (the killers) what they want."

Hours before the talks were due to begin, four rebels and three security men died in gunbattles in Kashmir, the army said.

Violence has risen in Kashmir despite two years of peace talks between nuclear-armed India and Pakistan. The talks have made progress on people-to-people contacts and trade but little on the disputed region, trigger of two of their wars.