Both countries would continue trying to foster closer ties and could overlook past problems and push for "new cooperative mechanisms and regional partnerships," Singh told an Asia-Africa summit in Jakarta.

"In this spirit, in cooperation with Pakistan, we have embarked on a journey towards peace and good neighbourly ties," Singh told Asian and African leaders gathered for the summit in the Indonesian capital.

His remarks came after the second successful run Thursday of a trans-Kashmir bus service launched April 7 between Indian Kashmir's summer capital, Srinagar, and Muzaffarabad, capital of the Pakistani zone.

The bus service is seen as the biggest achievement of a 14-month peace process between the nuclear-armed neighbours who have fought two of their three wars over Muslim-majority Kashmir.

Singh also expressed his appreciation for a comment made by Pakistani President Pervez Musharraf on the Kashmir issue during his address to the summit on Friday.

"I appreciate the positive sentiments expressed by President Musharraf yesterday, which I fully reciprocate. We are sincere in our desire to resolve all issues in a mutually acceptable manner," Singh told the conference.

Musharraf said Friday that Pakistan and India "can be jointly proud of showing how sincerity, flexibility and courage can lead to bilateral achievement of peace and harmony."

Kashmir is in the grip of a 15-year-old insurgency that has so far left 40,000 people dead by official count. Separatists put the toll at between 80,000 and 100,000.

India and Pakistan hold the scenic region in part but claim it in full.

Earlier this week, at a meeting in New Delhi, Singh and Musharraf said the peace process between the two nations was "irreversible" and pledged to reach a "final settlement" on the territory.