Nuclear-armed foes Pakistan, India to talk peace over lunch

NEW DELHI (Reuters) - Pakistan President Asif Ali Zardari will sit down to lunch with Indian Prime Minister Manmohan Singh in New Delhi on Sunday in the highest-level meeting on each other's soil in seven years as the nuclear-armed foes seek to normalize relations.

Relations have warmed since Pakistan promised its neighbor most favored nation trade status in 2011, although a $10 million bounty offered by Washington for a Pakistani Islamist blamed for the 2008 attacks on Mumbai stirred old grievances.

At the lunch meeting the two leaders are expected to focus on trade, where progress has been made, leaving more intractable problems, such as Kashmir, to lower officials.

"The Prime Minister will talk only about issues related to trade, education and culture this time," a government source with knowledge of the itinerary told Reuters.

On Saturday, an avalanche buried 124 Pakistani soldiers and 11 civilians near the 6,000-metre Siachen glacier in Kashmir, known as the world's highest battlefield. India and Pakistan fought two wars over Siachen and hundreds have died there, mostly from the inhospitable conditions.

India has yet to comment on the disaster.

The continued freedom of Islamist Hafiz Saeed, suspected of masterminding an attack by Pakistan-based gunmen on India's financial capital, Mumbai, in 2008 that killed 166 people, could loom over the meeting.

India is furious Pakistan has not detained Saeed, despite handing over a dossier of evidence against him. Pakistan Prime Minister Yousuf Raza Gilani said on Friday that if anyone had concrete proof to prosecute Saeed they should present it to the courts.

And with Zardari and Singh both suffering major domestic problems, prospects for fixing the complex stand-off over disputed Kashmir, the trigger of two of three wars between the two countries since independence from Britain in 1947, are low.

Lasting Pakistan-India peace would go a long way to smoothing a perilous transition in Afghanistan as most NATO combat forces prepare to leave by the end of 2014.

India and Pakistan fought their most recent war in 1999, shortly after both sides declared they possessed nuclear weapons. Hundreds died on the disputed border in Kashmir before Pakistani troops and militants were forced to withdraw.

Zardari is also due to visit the shrine in western India of a revered Sufi Muslim saint seen as a symbol of harmony between South Asia's often competing religions.

Himself born in a village in what is now Pakistan, Singh has pushed for peace during his two terms in office, but his efforts were knocked off track by the 2008 ouster of former President Pervez Musharraf, with whom he had built trust.

The three-day rampage by 10 Pakistani gunmen in Mumbai later that year completely derailed the peace process - aimed at finding a solution to Kashmir and other feuds along a one of the world's most heavily armed borders. Talks only resumed a year ago.

Informal meetings, during international cricket matches, or in this case before Zardari's pilgrimage to the Sufi shrine, have become the hallmark of Singh's diplomacy.

In November, Singh met Gilani in the Maldives and promised to open a new chapter in their troubled history.

Hopes are focused on resolving the conflict at the Siachen glacier and a dispute over an oil-rich river estuary called Sir Creek.

Musharraf, the last Pakistani head of state to visit India in 2005, has said both issues were as good as fixed while he was in office.

(Reporting By Frank Jack Daniel; Editing by Nick Macfie)

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