NEW DELHI, Sept 5: India and Pakistan were scenting progress in the landmark meeting between their foreign ministers on Sunday, as officials explored the possibility for a second round of a structured composite dialogue to be carried out in a time- bound framework on all issues, including Kashmir.

"The chances of a second round of composite dialogue are very high," a Pakistani official involved in the talks told Dawn. "The talks are being held in a positive atmosphere," he noted. And to give visual proof to reports that the atmosphere inside the British-era Hyderabad House was 'affable', as their joint statement claimed, Indian Foreign Minister Kunwar Natwar Singh and his Pakistan counterpart Khurshid Mehmood Kasuri hugged each other and shook hands with warmth before a large gaggle of cameramen.

"I have come with a positive frame of mind. We will review progress on all items of the composite dialogue process," Mr Kasuri said. He denied Indian claims made late on Saturday that he was obsessed with Kashmir.

"We are not unifocal. Let me clarify that. We are ready to discuss all issues," Mr Kasuri said. "Good relations with India are in the interest of Pakistan." Mr Natwar Singh said he couldn't agree more.

A joint statement issued after the meeting talks said: "The foreign ministers of Pakistan and India met this morning on the first day of the foreign minister-level talks to review the progress in the composite dialogue between the two countries and to explore ways of taking the process forward.

"The two ministers met on a one-on-one basis for over an hour, followed by delegation-level talks. "The meetings were held in a friendly, cordial, affable and constructive atmosphere.

The two ministers reviewed the recommendations of the foreign secretaries, and assessed positively the results of the meetings held in the first round of the composite dialogue. The foreign minister-level talks will continue tomorrow."

Officials said the two countries on Sunday agreed on a series of confidence-building measures, including talks on starting a bus service between the divided parts of Kashmir. There were reports that some agreements on their CBMs were reached at remarkably rancour-free talks between the foreign ministers.

Exact details of the CBMs are expected to be announced on Monday, at the conclusion of the two-day talks between Mr Natwar Singh and Mr Kasuri. Their meeting is being described as the first since the Swaran-Bhutto talks in 1962, but the fact is that Swaran Singh was not a foreign minister at that time.

Pakistan Foreign Office spokesman Masood Khan told reporters: "As far as Pakistan is concerned, we are for sustaining the dialogue, which should be result-oriented and meaningful."

Indian sources indicated that besides official-level talks on starting a bus service between Srinagar and Muzaffarabad, the two sides agreed to discuss other CBMs. They include a train service between Rajasthan and Sindh, more people-to-people exchanges by liberalizing the visa regime and certain military CBMs.

The two-day talks are aimed at reviewing the progress of the composite dialogue process the two countries initiated in January and to explore ways and means of carrying it forward.

The eight-point dialogue was revived after a gap of six years following a landmark agreement between then Indian prime minister Atal Behari Vajpayee and President Pervez Musharraf in Islamabad in January.

The subjects included Jammu and Kashmir, the military stand-off on Siachen, differences over navigation rights in a reservoir in Kashmir and demarcation of the maritime boundary in a muddy estuary that separates Gujarat from Sindh.

Official sources said that in order to carry forward the composite dialogue process, India and Pakistan today made "good progress in some areas" and were looking at a series of CBMs, including continuation of cease-fire, disengagement in Siachen and operationalizing the Srinagar-Muzaffarabad bus service.

The two sides were also exploring the possibility of working out a memorandum of understanding on cooperation between respective coast guards and exchange of visits by foreign service probationers.

Both sides voiced their willingness to consider measures for using the Line of Control as a 'bridge' between the two countries by enhancing 'cross-border contacts'. During the talks, New Delhi registered its concerns over alleged cross-border terrorism and infiltration and reminded Islamabad of its commitment in January of not allowing its territory to be used for acts of terror against India.

The Natwar-Kasuri meeting comes just weeks ahead of a likely summit between Prime Minister Manmohan Singh and President Musharraf on the sidelines of the UN General Assembly later this month.