India has welcomed the United States' blacklisting of Hizbul Mujahideen, the largest armed group in Indian-administered Kashmir, as a "foreign terrorist organisation".

The US Department of State said in a statement on Wednesday that Washington is freezing the group's assets to deny it "the resources it needs to carry out terrorist attacks". The US also prohibited Americans from having dealings with the armed group.

"We welcome the designation of the Hizbul Mujahideen as a terrorist organisation," Raveesh Kumar, India's foreign ministry spokesman, told reporters on Friday.

"All of us are aware of what kind of terrorist activities they have conducted in the state of Jammu and Kashmir," he said, adding it was key to "end moral, diplomatic and material support" to such groups.

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The reaction from India comes after Pakistan expressed anger and disappointment over Washington's move, terming the US sanctions as "unjustified".

"We are disappointed," Nafees Zakaria, Pakistan's foreign ministry spokesman, said at a media briefing in Islamabad on Thursday.

"The designation of individuals or groups supporting the Kashmiri right to self-determination as terrorists was completely unjustified," he said.

Hizbul Mujahideen is the largest indigenous armed group fighting against Indian rule in the Himalayan territory since an armed rebellion broke out in 1989.

In June, the US designated the group's leader, Syed Salahuddin, also known as Mohammad Yusuf Shah, as a "terrorist".

Kashmir has been divided between India and Pakistan since the end of British colonial rule in 1947. Both claim the territory in its entirety.

Several armed rebel groups are fighting against Indian rule in Kashmir, with tens of thousands of people, most of them civilians, killed in the nearly three decades-old conflict.

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Anti-India sentiment runs deep in Kashmir's predominantly Muslim population, and most people support the fighters' cause against Indian rule.

Nearly 70,000 people have been killed in the uprising and the ensuing Indian military crackdown.

In recent years, Kashmiris, mainly young people, have displayed open solidarity with anti-Indian fighters and sought to protect them by engaging troops in street clashes during military operations.

The anti-India protests and clashes have persisted despite the Indian army chief warning recently that "tough action" would be taken against stone throwers during counter attacks.

India accuses Pakistan of arming and training the fighters, which Pakistan denies.