Speaking to reporters after talks with US President George W. Bush, Musharraf said he hoped that the two neighbours would "move forward" in resolution of all disputes.

"We are moving well on the issue of confidence building measures. And also the dialogue process towards resolution of disputes," said the Pakistani leader, who flew in here Friday from a tour of three Latin American states.

"We hope that we will move forward in all resolution of all disputes and the dispute happens to be Kashmir, therefore moving forward on that. I'm very optimistic of the future," he said.

India maintains that Kashmir is just one of many points of dispute between the archrivals and has said all issues should be addressed simultaneously while Pakistan insists Kashmir remains the core issue.

India and Pakistan both hold Kashmir in part but claim it in its entirety. The Himalayan region has been the cause of two of the three wars they have fought since independence from Britain in 1947.

Bush said Musharraf "has showed great courage" in building India-Pakistan ties, "leading toward what we hope will be a peaceful solution of what has been a historically difficult problem."

Briefing reporters on condition he not be named, a senior US administration official said after the 45-minute meeting that the Pakistani leader had pledged to be "flexible" in dialogue with New Delhi.

Musharraf had suggested recently that Kashmir be divided into seven regions -- any one of which could be demilitarised and either placed under United Nations mandate, joint control or given independence.

But Indian Prime Minister Manmohan Singh had promptly rejected the proposals, saying any redrawing of boundaries was unacceptable.

The next round of India-Pakistan talks on Kashmir will be held after Christmas.

They have been engaged in a peace dialogue since January, with officials and politicians discussing various major sticking points. The first round of the talks was completed in September.

The December 27-28 meeting will look at overall progress on key issues such as confidence-building measures between the two countries, and Kashmir.

In April last year then-Indian prime minister Atal Behari Vajpayee started the current peace process by offering a "hand of friendship" to Pakistan.

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