The three-day summit between Pakistani President Pervez Musharraf and Indian Prime Minister Atal Bihari Vajpayee broke up without a final joint statement apparently because of a dispute over wording concerning the conflict in the Himalayan region.
Media and analysts characterized the talks in the Indian city of Agra as a failure and feared an increase in violence in Kashmir.
But India's foreign and defense minister Jaswant Singh insisted the talks which were the first between the South Asian rivals in two years were not the end of the dialogue.
"Our commitment to peace, dialogue and amity between the two countries remains," Singh said. "The caravan of peace will continue on its march and on some auspicious day it will reach its destination."
In Islamabad, Pakistani Foreign Minister Abdul Sattar said the two leaders had a "meeting of minds." He said "progress in Agra should be a foundation for continuation of dialogue in future."
Although disappointed that a summit declaration was scuttled at the 11th hour, Musharraf returned from India "optimistic about the prospects for better relations between Pakistan and India," Sattar said.
He refused to place blame for the failure to reach a joint declaration.
Neither side has said what caused the breakdown in talks.
Earlier, Pakistan's Information Secretary Anwar Mahmood said Musharraf was "very disappointed and hurt that he and Vajpayee had agreed to everything, they had settled on an agreement and six hours later it was in tatters."
The stumbling block appeared to be the wording in the joint statement over describing the militants in Kashmir, whom India calls terrorists and Pakistan terms freedom fighters. Militants train in camps in Pakistan and cross over India's borders into Kashmir. But while India accuses Pakistan of arming and aiding Islamic militants, Islamabad says it only gives them moral support.
Although, no date for fresh talks has yet been set, Vajpayee and Musharraf are expected to meet in September in New York when they attend the United Nations General Assembly.
Jaswant Singh, India's foreign minister, has also been invited to Pakistan.
Both India and Pakistan are keen to demonstrate that they aim to improve security in the region to lift sanctions slapped by the United States. The sanctions were imposed three years ago after both countries conducted underground nuclear tests provoking global criticism.
The Kashmir dispute has raged over the last 54 years when India won independence from British colonial rulers, who carved out Muslim Pakistan from Hindu-majority India. Both countries claim the entire Kashmir region.
Meanwhile, several militant groups based in Pakistan have threatend to escalate insurgency in Kashmir after the summit's end. Some 90 people died in fighting between guerrillas and Indian soldiers during the three-day summit.
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