More confidence-building measures are to be announced when the talks between Pakistan Foreign Minister Khurshid Mahmud Kasuri and his Indian counterpart Natwar Singh wind up later on Monday.

The talks are the most senior-level discussions since the leaders of both nations met in Islamabad in January.

But Kasuri and Singh, who on Sunday held a first round described by officials as "friendly, cordial, affable and constructive", have agreed that key differences should be revisited at a later stage, according to unnamed officials widely quoted in the Indian media.

These include the armed resistance in the Indian zone of divided Kashmir which has left at least 40,000 people dead in the past 15 years as well as the core issue - control of Kashmir.

India and Pakistan each hold part of the picturesque region and both claim it in full. They have fought two of their three wars over the Himalayan area.

Pakistan wants Kashmiris to decide their future through a UN-sponsored plebiscite while India says the matter should be decided bilaterally between New Delhi and Islamabad.

Further dialogue

India and Pakistan each hold part
of Kashmir and both claim it in full

According to the officials, Kasuri and Singh would issue a joint statement later on Monday agreeing that a fresh round of the "composite dialogue" process - a flurry of official-level meetings focusing on eight key points - should be held.

They were also expected to announce agreement in principle that a bus service linking the two rival zones of Kashmir be started and that the railway line between India's Rajasthan state and Sind province in Pakistan - closed since a 1965 war - be reopened.

They would give the nod as well to a continuation of official-level talks on nuclear confidence-building measures, narcotics control and improving trade ties, as well as dialogue between their respective coast guard.

Both sides separately said they were committed to continuing the composite dialogue.

'Terrorism' denied

However, they disagreed on the separatist struggle in Kashmir, with India accusing Pakistan of not living up to a January promise to rein in the fighters and Pakistan denying it was sponsoring them.

Indian Prime Minister Dr Manmohan Singh on Saturday warned that the dialogue between the rival states would make real progress "only if terrorism is under control".

Analysts said Kasuri and his Indian counterpart had essentially been engaged this weekend in a "holding operation" ahead of a first contact between Pakistani President Pervez Musharraf and Premier Singh on the sidelines of the UN General Assembly in New York later this month.