Indian soldiers opened fire on demonstrators in restive Kashmir on Sunday, killing one person, during protests over the shooting death of a teenager in a military operation, a police chief said.

Soldiers shot dead a 17-year-old man late Saturday during an operation to hunt for suspected militants in Markondal village, 25 kilometres (15.5 miles) north of the main city of Srinagar, the police chief said.

Hundreds of angry villagers gathered to protest the teenager's death early on Sunday, throwing rocks at withdrawing soldiers who opened fire, killing one person and injuring three others, Kashmir's police chief Abdul Gani Mir said.

"The army had laid a cordon during which a firing incident took place. One person was killed," Mir told AFP of the operation, without giving further details about the victim's identity.

Police have launched an investigation into both incidents and the area has been cordoned off by security forces amid fears of further unrest over the deaths, officials said.

"Police have registered a case against the army," Mir said.

An uncle of the 17-year-old man killed said they noticed two private vehicles outside their home late at night. They went outside to investigate, thinking someone was trying to steal their cattle, he said.

"Suddenly the soldiers fired a burst of bullets at us. My nephew was hit in his head and he died on the spot," Nazir Ahmad told AFP by phone.

The army described the deaths as regrettable and has launched its own probe into the incidents. The teenager was shot dead during a joint military operation with police in the area, a senior army official said.

"If any army personnel is found guilty, he will be dealt with strictly," major general R. R. Nimbodkar told reporters.

The incidents come amid stepped-up security across Indian Kashmir, after a series of recent attacks by militants including one earlier this month in Srinagar in which eight soldiers were killed.

The June 24 attack was one of the deadliest by militants in years and came on the eve of a rare visit to the disputed region by Indian Prime Minister Manmohan Singh.

About a dozen armed rebel groups have been fighting Indian forces in Kashmir since 1989 for independence or merger with Pakistan. The fighting has left tens of thousands, mostly civilians dead.

A controversial law introduced in 1990 includes a provision that exempts the military deployed in Indian Kashmir from being prosecuted in civilian courts, unless specifically permitted by New Delhi.

Kashmir is divided between India and Pakistan by a UN monitored line of control, but both countries claim the Himalayan region in full and have fought two of their three wars over the territory.