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Militants have been threatening policemen, especially SPOs, to give up their jobs or face the consequences.
The killings have triggered panic in the lower ranks of the police department with at least six policemen resigning.
Weapons and war-like stores have been recovered from the encounter site.
Officers said at least eight people were picked up by militants from Shopian, Kulgam, Anantnag and Awantipora.
The militants' action came on a day when the NIA arrested the second son of globally wanted terrorist Syed Salahuddin.
The attack on policemen had followed an early morning encounter in which two militants, including Altaf Ahmad Dar, were killed.
The security forces had cordoned off the area Friday night following specific intelligence inputs about the presence of militants and had started a search operation.
Three civilians were also hurt after protestors clashed with security forces
The forces opened fire on the civilians claiming that they obstructed to a combing operation being conducted to nab a group of holed up militants.
Constable Javaid Ahmad was kidnapped by unidentified gunmen from his home at Vehil on Thursday night. He was shot in the head.