Islamabad (AFP) - Pakistan’s leader announced his readiness to defend the country on Saturday, after New Delhi blamed a deadly attack in Indian-run Kashmir on Islamabad, sending already fraught relations into a tailspin with soldiers exchanging gunfire across their contested frontier.

Prime Minister Shehbaz Sharif also called for a “neutral investigation”, with India accusing Pakistan of supporting “cross-border terrorism” after gunmen carried out the worst attack on civilians in Kashmir for a quarter of a century.

Islamabad denies involvement in the April 22 attack on tourists in Pahalgam, where a gang of gunmen killed 26 men.

“Our valiant armed forces remain fully capable and prepared to defend the country’s sovereignty,” Sharif said at a military ceremony in Abbottabad.

Both sides have imposed a slew of diplomatic measures, and exchanged gunfire in Kashmir two times in as many days.

India’s army said “unprovoked” small arms firing was carried out by “multiple” Pakistan army posts overnight.

“Indian troops responded appropriately with small arms,” it said in a statement, adding that no casualties were reported.

There was no immediate confirmation from Pakistan, but both sides had confirmed gunfire between their respective forces the previous night.

The United Nations has urged the neighbours, which have fought multiple wars, to show “maximum restraint”.

Iran’s foreign ministry said Saturday that Tehran has offered to play mediator, a day after a senior Saudi official said Riyadh was trying to “prevent an escalation”.

US President Donald Trump has downplayed the tensions, saying that the dispute will get “figured out, one way or another”.

- ‘Track and punish’ -

Kashmir has been divided between India and Pakistan since their independence in 1947. Both claim the territory in full but govern separate portions of it.

Rebel groups have waged an insurgency in Indian-controlled Kashmir since 1989, demanding independence or a merger with Pakistan.

Indian security forces have launched a giant manhunt for those responsible for the attack in Pahalgam, with police naming two Pakistani nationals among the fugitives.

Indian police say three of the gunmen are members of the Pakistan-based Lashkar-e-Taiba group, a UN-designated terrorist organisation, and issued a bounty for their arrest.

Indian troops blew up homes in Kashmir in their search and issued wanted posters with sketches of three men.

Indian Prime Minister Narendra Modi on Thursday said his country would “track and punish every terrorist and their backer”, vowing to “pursue them to the ends of the Earth”.

Pakistan’s Sharif said the country was “open to participating in any neutral, transparent and credible investigation” in the attack.

A day after the attack, New Delhi suspended a water-sharing treaty, announced the closure of the main land border crossing with Pakistan, downgraded diplomatic ties, and withdrew visas for Pakistanis.

Islamabad in response ordered the expulsion of Indian diplomats and military advisers, cancelling visas for Indian nationals – with the exception of Sikh pilgrims – and closing the main border crossing from its side.

Pakistan also warned that any attempt by India to stop water supplies from the Indus River would be an “act of war”.

At the frontier, created at the end of British rule when the sub-continent was partitioned into Hindu-majority India and Muslim-majority Pakistan, distraught citizens crossed.

The measures have abruptly ended rare visits to see relatives separated for generations by the border.

Among those at the Wagah border leaving Pakistan was 39-year-old Ghaffar Musafir, who was returning to his home in Indian-administered Kashmir.

“I’m Indian. I love India, but my family is here,” he said. “And it’s not like I hate Pakistan. I love Pakistan too.”

Pahalgam marks a dramatic shift in recent Kashmiri rebel attacks, which typically target Indian security forces.

Experts say that an Indian military response may still be in the pipeline.

In 2019, a suicide attack killed 41 Indian troops in Kashmir and triggered Indian air strikes inside Pakistan, bringing the countries to the brink of all-out war.