The security forces have recovered three AK 47 from the terrorists in the operation.
Earlier, acting on specific information, the security forces surrounded Awneera village on Saturday evening upon which they were fired at by the militants, leading to the gunfight, a police spokesman said.
The house from where the militants were firing was blasted by the security forces, they said, adding that all the three militants hiding there have been killed.
The gunfight resumed this morning and the three militants were killed.
Operational commander of Hizb-ul-Mujahideen, Yasin Itoo alias Mehmood Ghaznavi is believed to be among the holed up terrorists. However, the search operation is still on.
Stocks Regain Ground But Still Close Lower For The Week
The mounting tensions between North Korea and the U.S. took its toll on the market for the third day in a row. South Korea's Kospi sank 1.7 per cent to 2,319.83 and Hong Kong's Hang Seng shed 1.8 per cent to 26,946.81.
Earlier, two Army men were martyred and three others injured in the encounter.
The two soldiers who have lost their lives have been identified Sepoy Ilayaraja P and Sepoy Gowai Sumedh Waman.
The wounded troopers were evacuated to the military base hospital in Srinagar. Itoo was held responsible for instigating the violence in the Valley after the killing of militant Burhan Wani previous year. A dozen stone-pelting protesters were injured in clashes with security forces in the area. However, many were injured during the protests which turned in to clashes as government forces resorted to tear gas shelling and pellet firing.