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JAMMU, India, Aug 1 (Reuters) - Twenty people were reported killed on Thursday in fighting in the Kashmir region disputed by nuclear-armed rivals India and Pakistan.

The latest spate of violence follows a weekend peace mission to India and Pakistan by U.S. Secretary of State Colin Powell.

In one clash, four Islamic militants and an Indian soldier were killed in a gunbattle that was similar to an incident that brought the two countries close to war in May.

Authorities in Pakistani Kashmir said two people died and three were injured in Indian mortar and shell fire across the line of control, targeting more than a dozen villages in the Neelum valley southeast of the city of Muzaffarabad.

The deputy commissioner of Muzaffarabad district Mahmood-ul- Hassan told Reuters the Indian fire was unprovoked and killed a boy of four and another of 15.

Thirteen more people, including nine militants, died in other outbreaks of violence in Indian Kashmir during the day, Indian officials said.

A senior Indian defence official told Reuters heavily armed guerrillas sneaked late on Wednesday into a high-security zone in Rajouri, 175 km (110 miles) north of the state winter capital, Jammu, housing senior police and civilian officials and their families.

The official, who did not want to be named, said the guerrillas were spotted by security forces and the 20-house complex was evacuated before shooting broke.

He said the four militants, holed up in two houses, hurled grenades, used rocket launchers and fired automatic weapons in a 12-hour battle that ended on Thursday when they were killed by security forces. An army captain also died in the fighting.

India's defence ministry said the spate of guerrilla attacks seemed aimed at disrupting state elections due by mid-October. India sees the vote as crucial to boosting the legitimacy of its rule in Jammu and Kashmir, racked by a separatist revolt.

The Kashmir region is at the heart of a military standoff, with India and Pakistan massing a million troops on their border since last December.

Last May, war nearly erupted after a raid by Pakistan-based militants on an Indian army camp in Kashmir in which more than 30 people died, including families of frontline soldiers.

No guerrilla group has claimed responsibility for the raid on Thursday that followed in the heels of Powell's visit.

Powell said the elections in Kashmir could be part of a broad process to address the grievances of the Kashmiri people and open the way for talks between India and Pakistan.

In parliament on Thursday, Indian Deputy Prime Minister Lal Krishna Advani promised the state election would be free and fair, since earlier polls have been seen as rigged.

India has also said it would view Pakistan's actions in the vote run-up as a "litmus test" of its pledge to curb militancy.

Indian officials say there was a brief lull in violence in the state when Pakistan promised late in May to halt militant incursions, a pledge that eased tension between the foes.

But now they say bloodshed in Jammu and Kashmir, mainly Hindu but officially secular India's only Muslim-majority state, has returned to previous levels. 

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