By Asif Shahzad, Ariba Shahid and Fayaz Bukhari ISLAMABAD/SRINAGAR, India (Reuters) -Pakistan closed its air space for Indian airlines and rejected New Delhi's suspension of a critical water sharing treaty on Thursday in retaliation for India's response to a deadly Islamist militant attack on tourists in Indian Kashmir.

With both nations on the brink, the Indus Waters Treaty becomes the latest flashpoint in the India-Pakistan standoff.

Pakistan has issued a maritime warning ahead of a missile test off the Karachi coast, intensifying tensions with India following a deadly terror attack in Kashmir. India has blamed Pakistan-based terror groups and retaliated by suspending the Indus Waters Treaty and shutting down key diplomatic and border ties.

Indian airlines Air India and IndiGo are bracing for higher fuel costs and longer journey times as they reroute international flights after Pakistan shut