Musharraf optimistic on Kashmir settlement

"We are and will remain optimistic about achieving a negotiated settlement to the dispute," he said in an interview to Saudi daily Okaz, which was carried Friday by the official Associated Press of Pakistan.

The Muslim-majority Kashmir state has been at the centre of tensions between the South Asian neighbours since the subcontinent was divided in 1947. Kashmir's status was never resolved during the bloody partition.

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The region has since been claimed by both countries and split between them. The countries have fought two of their three wars over Kashmir.

New Delhi accuses Pakistan of sponsoring Muslim militants to wage a proxy war against Indian rule since 1989.

Pakistan says Kashmiris must be allowed to choose between rule by Pakistan or India, as United Nations Security Council resolutions since 1948 have demanded, and accuses Indian troops of widespread rape, torture, extrajudicial killings and arbitrary arrests.

The nuclear rivals have been exchanging peace moves since Indian Prime Minister Atal Behari Vajpayee offered a "hand of friendship" to Pakistan on April 18 after a 17-month deadlock.

Musharraf said Pakistan and India did not enjoy the best of relations but "at least we have agreed to talk to each other and hopefully we will gradually move forward with time."

Meanwhile, Pakistan on Thursday slammed Indian Deputy Premier Lal Krishna Advani's allegations of its involvement in terrorism, saying that such statements were unhelpful in promoting the nascent peace process between rival nuclear neighhbours.

Foreign ministry spokesman Masood Khan in a statement said Advani's assertion was "factually incorrect and uncalled for."

It was "contrary to the Indian Prime Minister's offer of friendship and dialogue to resolve all outstanding issues, including the core issue of Jammu and Kashmir," he said.

Advani on Wednesday urged the United States to help New Delhi battle the threat of Islamic "terrorism" from Pakistan.

"The epicenter of international terrorism lies in India's immediate neighbourhood. It gives me no joy in pointing fingers, but the involvement of Pakistan can no longer be ignored," he told the World Affairs Council in Los Angeles.

Rejecting the charge, the Pakistani spokesman said: "Pakistan is in the forefront of the fight against terrorism. It is a key ally in the international war on terrorism.

"No country in the world has done more than Pakistan in combating this menace. Such remarks coming from an Indian leader were unhelpful," he said, adding that the two countries "should remain focused on the dialogue and peace process."

Indian Prime Minister Atal Behari Vajpayee offered a "hand of frindship" to Pakistan on April 18, raising hopes for a India-Pakistan dialogue.

Responding to the offer, Pakistan Prime Minister Zafarullah Jamali spoke to Vajpayee, ending a 17-month deadlock between the nuclear capable rivals.

The two sides have since re-appointed envoys and are due to revive train, air and bus links.

India accuses Pakistan of supporting "cross-border terrorism" in the disputed region of the Kashmir. Islamabad denies the charge, saying the struggle in Kashmir is indigenous, involving the right to self rule.