Thousands of residents chanting "Indian troops go home" and "we will spill blood for blood" poured onto the streets of Srinagar to join funeral processions for two Muslims who died of wounds in hospital early on Wednesday.
The latest unrest, triggered by a Kashmir government decision in June to transfer land to a Hindu pilgrimage trust, shattered several years of relative calm brought about by the India-Pakistan peace process.
Authorities cancelled the transfer following a spate of fatal protests, but failed to prevent riots in the Hindu-majority Jammu region of the state, with Hindu hardliners allegedly attacking Muslims and blocking the only road to the valley.
Four other Muslims were also shot and wounded on Wednesday when police opened fire on stone-throwing crowds, doctors and residents said, while protesters set fire to state-owned buildings and vehicles.
Police and witnesses reported protests in several parts of the city and in the Muslim-majority Kashmir valley, which has been hit by an anti-Indian insurgency since 1989.
|Thousands of people accompanied Aziz's coffin [EPA]
Among those shot by Indian security forces on Monday was a prominent separatist leader, Sheikh Abdul Aziz, who was leading a protest near the Line of Control, the de facto border which divides Kashmir between India and Pakistan.
Aziz's body was driven through Srinagar on Tuesday accompanied by an estimated 50,000 residents, before being buried.
Mirwaiz Umar Farooq and Syed Ali Geelani, two senior separatist leaders, have called for "non-violent protest demonstrations" to continue.
Farooq said: "We call upon the nation to observe three days of mourning and hold peaceful demonstrations."
He also called on Kashmiris to observe August 15, India's Independence Day, as a "black day".
Plea for peace
N N Vohra, the state governor, said: "I request you all to support the efforts of the administration in maintaining peace and tranquility."
He said security forces have ensured free supply of essentials to the valley as police were escorting all convoys on the national highway.
Residents say the protests have highlighted a growing frustration among Kashmiris that the peace process, launched in 2004, has yielded no progress on the dispute over the future of the region.
The dialogue was to address all issues of contention, including the status of Kashmir, which each country holds in part but claims in full.
But on-off negotiations between the two nuclear-armed rivals have remained mired in mutual recriminations over cross-border attacks.
India also refuses to scale down its massive security contingent in the Kashmir valley, a major cause of local resentment due to frequent allegations of human rights abuses.