Indian Prime Minister Atal Behari Vajpayee and Pakistani Prime Minister Zafarullah Jamali entered historic one-on-one talks straight after the opening of the 12th summit of the South Asian Association for Regional Cooperation (SAARC) at Islamabad's Convention Center.

"The meeting has taken place, it was a good meeting," Pakistan Foreign Minister Khurshid Mahmud Kasuri told reporters after the surprise meeting, as he entered his own bilateral talks with his Indian counterpart Yashwant Sinha.

The two premiers met privately for 15 minutes on the summit's sidelines before being joined by aides for another seven minutes of talks, state TV reported.

The two foreign ministers later met "in a very warm and cordial atmosphere" for 45 minutes, Kasuri said.

Vajpayee has now sought a meeting with Pakistani President Pervez Musharraf, who wields more power than Jamali, for Monday.

"Our prime minister has asked for a courtesy call with President Musharraf tomorrow," Sinha told reporters after meeting Kasuri.

Musharraf is holding a banquet later Sunday which Vajpayee will attend with the other six visiting SAARC leaders.

Vajpayee and Musharraf last met at a failed summit in the Indian city of Agra in July 2001.

Foreign ministry spokesman Masood Khan called the Vajpayee-Jamali meeting a "courtesy call" while state television reported that "close cooperation and other matters of mutual interest" were discussed.

Sinha had remarked on the eve of the summit that "the winds of change are blowing in the SAARC region."

SAARC leaders echoed his optimism at the opening ceremony.

"Our hearts are lifted by the winds of rapprochement that are blowing across our region," Bhutan's Prime Minister Jigme Yaeser Thinley said in his address.

The historic summit was earlier declared open by outgoing chairman, Nepal Prime Minister Surya Bahadur Thapa, in a tightly-guarded two-and-a-half-hour ceremony.

The leaders of the seven SAARC nations -- Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka -- delivered speeches and signed a social charter aimed at lifting the region's 1.4 billion people out of poverty.

The summit is the 18-year forum's first since January 2002. Last year's summit was cancelled when Vajpayee refused to travel to Pakistan because of ongoing tensions.

His journey to Islamabad for this year's summit comes eight months after he kick-started fresh peace moves with a "hand of friendship" offer to Pakistan -- a peace bid the 79-year-old has repeatedly declared will be the last of his lifetime.

Earlier the leaders of SAARC, which has been hostage to the decades-old tensions between its giants India and Pakistan, hailed the detente and voiced hope that a free trade pact would finally set the region on the path to progress.

"The reduction of tensions between the two largest member states of our association gives rise to much confidence," Sri Lanka President Chandrika Kumaratunga said.

Vajpayee used his speech to urge on a new era of trust.

"We must take the bold transition from mistrust to trust, from discord to concord, and from tension to peace.... Any joint endeavour needs mutual trust and confidence."

Jamali heaped praise on his Indian counterpart after the speech, calling him "a visionary, a poet, a prolific writer and an able politician, which are the qualities of a true leader."

Earlier the Pakistani premier linked economic progress to peace in the region.

"It is a stark reality that political differences and disputes have held back prospects of economic cooperation in South Asia," the Pakistani premier said.

Topping the summit agenda is a treaty on turning South Asia into a free trade zone, and an expanded anti-terrorism pact.

Under the South Asia Free Trade Area (SAFTA) Framework the seven states will begin lowering intra-SAARC tariffs to below 5.0 percent from 2006.

WAR.WIRE