India´s Manmohan Singh and his Pakistani counterpart Yousuf Raza Gilani shook hands in front of the media before beginning a short session of talks at a luxury island resort in the Indian Ocean.[break]
Their foreign ministers raised expectations at the summit by agreeing on Wednesday that the "trust deficit" between the two nuclear-armed rivals had narrowed and that the environment had "improved considerably."
Both ministers acknowledged the difficult work to do, not least tackling the vexed subject of Kashmir and Pakistan-based extremism, but the sense of optimism has raised morale at a meeting perennially overshadowed by tension.
In 2008, the South Asian Association for Regional Cooperation (SAARC) summit was soured by the bombing of the Indian embassy in Kabul just weeks earlier which India blamed on "elements" in Pakistan.
"The trust deficit that typically existed between the two countries for many, many years has been reduced to a large order," Pakistan´s Foreign Minister Hina Rabbani Khar said when she arrived in the Maldives.
But she cautioned: "We have many, many more miles to move ahead."
The two prime ministers last met in March when Gilani accepted Singh´s invitation to watch the India-Pakistan cricket World Cup semi-final. Their previous formal talks were at the April 2010 SAARC summit in Bhutan.
India and Pakistan have fought three wars since independence in 1947, two of them triggered by their territorial dispute over Kashmir, which remains a major hurdle in any future comprehensive peace deal.
A full peace dialogue -- suspended by India after the 2008 Mumbai attacks blamed on Pakistan-based militants -- was resumed in February this year.
The process remains tentative with only incremental progress on less contentious issues such as trade.
Last week, Pakistan´s cabinet announced it had approved a proposal giving India the status of "most favoured nation" but there has been confusion since about when it will be implemented.
Efforts to reduce tensions have been complicated by the increasing influence of Afghanistan in the bilateral equation.
Indian involvement in Afghanistan is sensitive, with Pakistan vehemently opposed to its arch foe meddling in what it considers its backyard.
Islamabad´s suspicions were fuelled when Afghanistan and India signed a strategic partnership pact last month.
Afghan President Hamid Karzai is also attending the SAARC summit, along with the leaders of other member nations Bangladesh, Bhutan, the Maldives, Nepal and Sri Lanka.
The US, which has encouraged the India-Pakistan dialogue, is keeping a close watch on the gathering with US Assistant Secretary of State for South and Central Asian Affairs Robert Blake in attendance.
Maldivian President Mohamed Nasheed, who is taking over the leadership of SAARC, said he wanted India and Pakistan to shed their differences and help rejuvenate the body, which is seen by critics as an ineffectual talking shop.
His office said he was keen that the two rivals resolve their issues and help release the potential of a grouping that accounts for a fifth of humanity in one of the world´s poorest regions.
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