Vajpayee (left) and Musharraf held landmark talks on Monday

There is muted optimism in Indian and Pakistani newspapers on the prospects for peace between their two countries.

The mere fact that Indian Prime Minister Atal Behari Vajpayee met Pakistani President Pervez Musharraf and Pakistani Prime Minister Mir Zafarullah Khan Jamali on the sidelines of the South Asian Association for Regional Co-operation (Saarc) summit was seen by Indian papers as a sign that relations are warming up.

Thaw

"The hour-long meeting and talks with President Pervez Musharraf indicates a thaw in the ice of bitterness by the warmth of mutual relations," India's Rashtriya Sahara believes.

"This is a good omen for the future."

It notes that "the bitterness that was generated from the meeting between Vajpayee and Musharraf in Agra in July 2001 has definitely been ended."

Why should it be difficult for the countries of South Asia to march side by side? Hindustan

The Indian Express agrees.

"Perhaps the most significant proposal made at the meeting was the institution of 'special envoys' to cut through the decades of hostility that seemed to defeat every attempt at peace," it points out.

India's Hindustan is in a similarly upbeat mood, praising both sides for avoiding the usual mutual carping that has often characterised relations between Islamabad and Delhi.

"For the first time in 15 years, Pakistan acted with prudence by not raising the Kashmir issue during the Saarc summit proceedings," the paper says.

"India reciprocated by not holding Pakistan directly responsible for terrorism," it adds.

Optimism

"There seems to be immense possibility of speeding up the process of normalising India-Pakistan relations," it continues.

The daily believes prospects for improved India-Pakistan relations also bodes well for wider cooperation in the South Asia region, and draws parallels with Europe.

How could this be in the interest of the people of this region when the Kashmir issue is unresolved? Express

"If the countries of Europe can be united after having fought two world wars, why should it be difficult for the countries of South Asia to march side by side?"

Across the border, Indian optimism was mirrored in the daily Pakistan.

"One should hope that the results of this summit will help change the fate of the people in the region," the paper remarks.

However, other Pakistani papers are less ebullient. Mr Vajpayee's speech on Sunday setting out a vision for a South Asian free trade area and offering to combat poverty seemed to cut little ice.

Kashmir

The Express, for instance, points out that Kashmir still remains a major sticking point, regardless of any improved mood music.

"Mr Vajpayee in his Saarc summit speech has announced the donation of $100m to the poverty alleviation fund," it recalls, "but the fact remains that unless the Kashmir dispute is resolved, no donations can alleviate poverty in the region."

Ausaf strikes a similarly cautious note.

"Free trade and exchange of cultural and educational delegations are a good thing and one should appreciate this," it acknowledges.

"But how could this be in the interest of the people of this region when the Kashmir issue is unresolved?"

The newspaper also gives voice to Pakistani suspicions about Mr Vajpayee's motives in pushing for a South Asian free trade area.

"If India thinks that it will realise its dream of free trade and economic cooperation in the region, it is only wishful thinking that will never materialise," the paper warns.

BBC Monitoring, based in Caversham in southern England, selects and translates information from radio, television, press, news agencies and the Internet from 150 countries in more than 70 languages.