Pakistan belittled India's conciliatory gestures Wednesday, insisting its nuclear neighbor withdraw troops to peacetime positions and take steps leading to a resumption of talks.

As U.S. Defense Secretary Donald H. Rumsfeld met with Indian officials in New Delhi, President Pervez Musharraf said the threat of war remained real as long as armies faced one another on the Kashmir border.

"The situation will remain grim till we disengage on the border," Musharraf said during a trip to Saudi Arabia.

"It is easing up, but as a military man, I have to see both (possibilities)," Musharraf said late Tuesday. "Intentions (to resort to war) are receding but these can change anytime."

Pakistan's Foreign Ministry also played down the moves, in which India pulled back its warships from waters close to Pakistan and lifted a six-month ban on Pakistani aircraft flying over India. India also has indicated it will appoint a new ambassador to Pakistan.

"In a situation where the Indian forces are massed on Pakistan's borders in a dangerous posture of confrontation, the Indian decisions do not address the main causes of tension," the Foreign Ministry said in a statement Wednesday.

"We trust that India will soon announce further steps leading to the resumption of a meaningful dialogue between the two countries, especially the core issue of Kashmir," the statement said.

The Pakistani government also called on India to redeploy its troops to peacetime positions, "instead of gestures which carry little substance."

The conciliatory steps came after Musharraf gave assurances to India — relayed through a U.S. envoy last week — that he had ordered his forces to prevent Muslim militants based in Pakistan from crossing into Indian-controlled Kashmir.

India's government refuses to talk with Pakistan until it is satisfied that the infiltration has stopped.

In New Delhi, Rumsfeld discussed ways to monitor movement across the Line of Control dividing Kashmir between India and Pakistan.

Meeting with India's National Security Adviser Brajesh Mishra, the U.S. defense secretary suggested using U.S. surveillance to assess infiltration, a senior U.S. defense official said.

The official, who spoke on condition of anonymity, said Rumsfeld discussed gathering surveillance experts from Britain, the United States, India and Pakistan to consider a program using ground sensors to monitor infiltration. The official said that would not include U.S. or foreign troops.

Islamic militants have waged a 12-year fight for the independence of Indian-controlled Kashmir or its merger with Muslim Pakistan.

India accuses Pakistan of financing and training the militants. Pakistan says it only offers diplomatic and moral support to the militants.

Stopping the infiltration has been India's key demand in its standoff with Pakistan, which raised fears of a possible fourth war between them. Tensions eased somewhat in recent days, but 1 million soldiers remained along the their frontier, and cross-border shelling continued.

After meeting with Defense Minister George Fernandes, Rumsfeld said constructive steps were being taken to pull India and Pakistan from their war footing.

Fernandes said he would not go into specifics about his discussions with Rumsfeld, but added that he believed "the understandings we reached on how to deal with some of the immediate problems we are facing will bear fruit and lead to a better atmosphere on the subcontinent."

Rumsfeld had lunch with Indian External Affairs Minister Jaswant Singh and was scheduled to meet Vajpayee in the evening, then head to Pakistan for similar talks there about the six-month standoff between the longtime adversaries.

Pro-militant groups in Pakistan vowed to continue their guerrilla insurgency in India's portion of Kashmir, and shelling and small-arms fire between Indian and Pakistani forces continued along the disputed province's frontier.

At least seven suspected guerrillas were killed Wednesday when fighters of two Pakistan-based Islamic militant groups clashed on the Indian side of Kashmir in Doda district, 155 miles northeast of Jammu, the winter capital of Jammu-Kashmir state, said Subhash Raina, a police spokesman.

The exchange of gunfire lasted nearly three hours in a hilly area. Six militants from Hezb-ul-Mujahedeen and one from Lashkar-e-Tayyaba were killed, Raina said.

The police report could not be independently verified as journalists are not allowed up to the Line of Control unless escorted by the military.

In Jammu, heavy Pakistani mortar fire destroyed 11 homes in the Naushahra sector. More than two dozen cattle were killed in the overnight firing, Raina said.