Pakistan carried out a second missile test in three days on Monday after saying it was preparing for an incursion by India, as Moody's warned that the standoff over violence in Kashmir could set back Islamabad's economic reforms.

Pakistan's military has claimed it has successfully test-fired a ballistic missile as tensions with neighbouring India over a deadly shooting attack in Indian-administered Kashmir last month remain high.

Pakistan has test fired a ballistic missile as tensions with India spike over last month's deadly attack on tourists in the disputed Kashmir region