Pakistan on Friday released nearly 340 Indian fishermen held for violating territorial waters, amid high tensions over the disputed Himalayan territory of Kashmir.

The move is part of an understanding between the nuclear-armed rivals to release citizens who mistakenly stray into each other's waters.

"Today, we have released 337 Indian fishermen and seven other juveniles and they are leaving for Lahore", where they will be handed to Indian authorities at the Wagah border crossing on Saturday, Shuja Haider, a senior official at Karachi's Malir jail, told AFP.

The release had been sped up as a goodwill gesture to India, officials said.

Sporadic firing in recent weeks across the heavily militarised Line of Control (LoC), the de facto border in Kashmir, has sent tensions between the neighbours soaring.

Kashmir has been in dispute since India and Pakistan gained independence from Britain in 1947, with both sides claiming it in full but controlling only part, and violence flares from time to time.

The latest round was triggered by a raid on August 5 that left five Indian soldiers dead, blamed by Delhi on the Pakistani military. Islamabad has denied the claims and struck a conciliatory tone, urging restraint and dialogue.

Fishermen from both countries are frequently held for straying across the disputed and poorly defined maritime boundary in the Arabian Sea.

After Friday's release there are still 97 Indian fishermen and three other Indian nationals including a juvenile languishing in jails in Karachi.

Kousan Rama, 40, who had been held for the last year, said: "I am very happy to be going back home. My family will be delighted to see me back at home."

He called for a peaceful resolution to the Kashmir dispute, which has been the cause of two wars between India and Pakistan.

"We should live in harmony with each other like brothers, like friends and like good neighbours," he added.

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