The United Nations urged India and Pakistan to show "maximum restraint" as the nuclear-armed rivals imposed tit-for-tat diplomatic measures over a deadly shooting in Kashmir.

Relations have plunged to their lowest level in years, with India accusing Pakistan of supporting "cross-border terrorism" after gunmen carried out the worst attack on civilians in contested Muslim-majority Kashmir for a quarter of a century.

"We very much appeal to both the governments... to exercise maximum restraint, and to ensure that the situation and the developments we've seen do not deteriorate any further," UN spokesman Stephane Dujarric told reporters in New York on Thursday.

"Any issues between Pakistan and India, we believe, can be and should be resolved peacefully through meaningful mutual engagement".

Indian Prime Minister Narendra Modi on Thursday vowed to hunt down the gunmen responsible for killing 26 civilians at the popular tourist site of Pahalgam, after Indian police identified two of the three fugitive gunmen as Pakistani.

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"I say to the whole world: India will identify, track and punish every terrorist and their backer," Modi said in his first speech since Tuesday's attack in the Himalayan region.

"We will pursue them to the ends of the Earth."

Denying any involvement, Islamabad called attempts to link Pakistan to the Pahalgam attack "frivolous" and vowed to respond to any Indian action.

"Any threat to Pakistan's sovereignty and to the security of its people will be met with firm reciprocal measures in all domains," a Pakistani statement said after Pakistan Prime Minister Shehbaz Sharif held a rare National Security Committee with top military chiefs.

Kashmir has been divided between India and Pakistan since its independence in 1947, with both claiming the territory in full but governing separate portions of it.

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Rebel groups have waged an insurgency in Indian-controlled Kashmir since 1989, demanding independence or a merger with Pakistan.

Tuesday's assault occurred as tourists enjoyed tranquil mountain views at the popular site at Pahalgam when gunmen burst out of the forests and raked crowds with automatic weapons.

Survivors told Indian media the gunmen targeted men and spared those who could give the Islamic declaration of faith.

Indian security forces have launched a vast manhunt for the attackers, with large numbers of people detained.

The attack has enraged Hindu nationalist groups, and students from Kashmir at institutions across India have reported experiencing harassment and intimidation.