"On the issue of missile tests, we clearly remain deeply concerned about the dangers that continue to be posed by both nuclear weapons and ballistic missiles in South Asia," US State Department deputy spokesman Adam Ereli told reporters.

The United States continued to urge Pakistan and its neighbour and nuclear-rival India to take steps to prevent an arms race and to guard against possible nuclear use, Ereli said.

President Pervez Musharraf said Thursday that Pakistan would conduct an "important" missile test in two months' time, stressing that its nuclear and missile programmes remain irreversible.

Musharraf did not disclose details of the test but said domestic critics who believed that Pakistan had decided to roll back its nuclear and missile programmes were living in a "fool's paradise," Pakistan's Dawn newspaper reported.

He did not specify if the test would be of a nuclear-capable missile.

Musharraf was quoted by another newspaper as saying it would be an "extremely important substantive test", most likely of a long range missile.

Early last month nuclear armed Pakistan successfully test fired a ballistic missile Hatf V, which has a range of 1,500 kilometers (930 miles). The missile could carry nuclear warheads deep inside India.

"I would note that in this regard, we are encouraged that India and Pakistan have just agreed to work toward a number of measures to reduce risk in the region, including a more advanced agreement on notification of missile tests," Ereli said.

Musharaff's disclosure of the upcoming missile test came just as India and Pakistan agreed to strive for a final settlement to their 56-year-old dispute over Kashmir and to reopen consulates in their largest cities in the latest step to repair ties.

In their first talks in three years on Kashmir, the two sides issued a joint statement on Monday pledging to "continue the sustained and serious dialogue to find a peaceful, negotiated final settlement" on the dispute.

Asked whether he was especially concerned about Pakistan, as his statement sounded he was worried about the general situation in South Asia, Ereli said: "I would say there is no marked change in our level of concern.

"Regarding this issue, it is an issue that we continue to raise with both countries, and that I would note, both countries discuss between themselves. And that is a good thing.

"It is something that we see as a positive development, in the sense that sources of tension are being addressed in a bilateral and cooperative way, and that's to be welcomed," he said.

WAR.WIRE