ISLAMABAD, PAKISTAN, AUG. 13 -- Indian soldiers tried to capture a mountain outpost, starting a firefight with Pakistani soldiers along the cease-fire line dividing Kashmir, the Pakistan government said today.

India denied Defense Ministry reports that a battle took place Sunday in the Kel sector of Azad ("Free") Kashmir, a part of the Himalayan region under Pakistan's control. The ministry said there were Indian casualties, but it did not release any figures.

The reported attack occurred the day after talks aimed at "confidence-building" measures to ease border tensions had adjourned.

Earlier today, a Foreign Ministry spokesman reported no progress in the talks, which ended Saturday without a date set for next meeting.

India, predominantly Hindu , and Moslem Pakistan have been uneasy neighbors since their partition in 1947, when British colonial rule ended.

A Moslem separatist uprising in the portion of Kashmir under India's control has raised tensions. India's military crackdown on the separatists has claimed at least 950 lives since late January.

"The war threat has never receded," an official in Pakistan's Defense Ministry said. "This could be an isolated incident or it could lead to escalation."

Indian soldiers reportedly used artillery, anti-tank guns and mortars in attacking the outpost 60 miles northeast of Muzzaffarabad, capital of Pakistan-controlled Kashmir, and were driven off with mortar fire after about an hour, the Defense Ministry said.

"Our forces repulsed the attack and inflicted casualties on the intruders," one official said.

In New Delhi, an Indian government spokesman disputed the report. "It's not true. We have not attacked. We have not used any artillery. We have not suffered any casualties," the official said.

The attack was reported to United Nations military observers in New Delhi and Islamabad, the Defense Ministry said. The official described the alleged attack as an attempt to divert world attention from the secessionist movement in Indian-held Kashmir.

India accuses Pakistan of arming, training and harboring Moslem militants fighting in Indian Kashmir, which Pakistan denies. Pakistan contends India is using brutal force to crush an independence movement.

Skirmishes and small arms fire are frequent along the U.N.-monitored cease-fire line, but Sunday's assault marked the first time that heavy artillery has been used, the Defense Ministry said.