* Most intense fighting along Line of Control since 2003 ceasefire
* India, Pakista issue different versions of latest clash
* Three dead in weekend riots between Hindus and Moslems in border area (Adds Jammu unrest)
By Abu Arqam Naqash
MUZAFFARABAD, Pakistan, Aug 12 (Reuters) - Pakistan accused Indian troops of firing shells across the disputed border in Kashmir on Monday and tensions ran high in both countries after last week's killing of Indian soldiers set off a wave of skirmishes between the two nuclear-armed rivals.
Skirmishes flared along the 740-km (445-mile) Line of Control that divides Kashmir on Aug. 6 when five Indian soldiers were ambushed and killed in the Poonch region. New Delhi blamed the attack on the Pakistan army. Islamabad denied involvement.
While tit-for-tat shelling and machinegun fire are common along the LoC the current round of fighting is one of the most intense since a ceasefire signed in 2003. It has been linked to protests in both countries and rowdy scenes in India's parliament. Under pressure from opposition politicians, the government has hinted at retaliation.
On Monday, a Pakistani army official said a civilian was killed as a result of "unprovoked Indian shelling" in the Battal, Chirikot and Satwal sectors.
"Pakistan troops effectively responded to Indian firing," the official said.
A spokesman for the Indian Defence Ministry offered a different version of events. He said Indian posts came under heavy mortar and automatic weapon fire overnight in the same area and that India "responded effectively." He said no damage or injuries were reported on the Indian side.
The disputed Himalayan region was split between India and Pakistan in 1948 but they both claim it in its entirety.
They have fought two of their three wars over Kashmir and India accuses Pakistan of supporting separatist rebels fighting its rule in its part of Kashmir since 1989.
The two armies have been exchanging fire on the front line since Tuesday, straining the ceasefire that has largely held for nearly a decade.
RIOTS AND PROTESTS
The Indian army patrolled an area close to Poonch on India's side of the fence on Monday after three people died in riots between Hindus and Muslims over the weekend. Opposition parties linked the rioting to the renewed border tensions, because some of the protesters involved had brandished a Pakistani flag.
"It is not a law and order situation, this is an issue of India's sovereignty," said Arun Jaitley, a senior leader of the Bharitya Janata Party.
Jaitley was prevented from visiting the riot-hit area of Kishtwar on Sunday, and Kashmir's chief minister, Omar Abdullah, accused him of trying to enflame tensions for political gain ahead of elections next year. Sporadic protests and clashes with police continued on Monday.
On Pakistan's side of the border, hundreds of people on Monday took to the street in Muzaffarabad, the capital of Pakistan-controlled Kashmir, accusing India of stepping up attacks.
"Down with India! Long live the Kashmir freedom movement!" they chanted as the crowd marched towards the Muzaffarabad office of the U.N. Military Observer Group which monitors the ceasefire.
"India does not want peace to prevail in this region," said migrant Uzair Ahmed Ghizali. "This becomes clear from atrocities inside the held territory and provocative actions along the Line of Control."
Media have reported Pakistan might redeploy some of its troops from the Afghan border, where the army is fighting a separate Taliban-linked insurgency, to the eastern frontier, but an army official said the option was not on the table.
India and Pakistan have been trying to restart stalled peace talks, possibly as early as this month, as well as a possible meeting between Indian Prime Minister Manmohan Singh and his Pakistani counterpart, Nawaz Sharif, in New York in September.
India has deployed tens of thousands of soldiers in Kashmir to put down an armed revolt that began in 1989. In recent years, violence has ebbed, but there has been little movement on a political settlement. (Writing by Maria Golovnina and Frank Jack Daniel; additional reporting by Ashok Pahalwan; Editing by Nick Macfie and Ron Popeski)
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