(Updates with grenade attacks, paragraphs 4-5) SRINAGAR, India, Jan 13 (Reuters) - Two separatist militants and a villager were killed on Saturday in a fierce gun battle with troops and many were wounded in grenade attacks in Indian Kashmir, army and police said. The firefight broke out in northern Kashmir hours after Indian Foreign Minister Pranab Mukherjee arrived in Pakistan to try to push forward a cautious peace process between the nuclear-armed neighbours. "The exchange of fire (between militants and soldiers) continues, a civilian also died in shooting," army spokesman Lieutenant-Colonel A. K. Mathur said. At least 12 people, including four policemen, were wounded when suspected militants hurled grenades at police in three separate incidents in Srinagar, summer capital of the region, police said. No one has claimed responsibility for the attacks so far. Analysts do not expect any major breakthrough during Mukherjee's two-day trip, but believe the neighbours would discuss ways to resolve their dispute over Kashmir. Two of the three wars between the south Asian nations since their independence from Britain were fought over Kashmir, but a peace process which began in 2004 has led to a decline in violence. The Muslim separatist revolt in the region has killed more than 45,000 people since 1989.