There was no immediate claim of responsibility for the blast in the southern district of Shopian in the Himalayan region. Police said they were on guard against outbursts of public anger over the incident, but were awaiting more details.
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"People were coming out of the mosque after morning prayers when the blast occurred," a police officer said.
India is tightening security nationwide ahead of celebrations this weekend to mark independence from Britain, particularly in Kashmir, where the event is usually marked by a shutdown and protests against the Indian occupation.
Officials say there have been growing signs of young people in Muslim-majority Kashmir adopting more extreme views, although violence is nowhere near the peak of the militancy in the 1990s.
Attacks on mosques have been almost unknown in the valley, although at times Indian forces have laid siege to separatists holed up in shrines. Four women were killed and scores wounded when a grenade exploded in Charar-e-Sharief mosque in central Kashmir in 2001.
India has long accused Pakistan of pushing separatists into Indian occupied Kashmir to foment revolt in the country's only Muslim-majority region, which both nations claim.
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Pakistan says it only gives moral and diplomatic support to the Kashmiri people in their struggle for self-determination.
Shopian, the site of the blast, is known for a strong presence of separatists. On Wednesday, separatists attacked an army patrol in the area, wounding a soldier.
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