Tensions between India and Pakistan overshadowed a South Asian summit ending in Sri Lanka Sunday, although the two nuclear-armed rivals said they would stick to their embattled peace process.

In the highest level talks between the two countries in over a year, Pakistan's Premier Yousuf Raza Gilani agreed to look into allegations his spy service was behind last month's suicide bombing of India's embassy in Kabul.

Sri Lankan diplomats hosting the summit said Gilani and Indian Prime Minister Manmohan Singh could have more informal talks before the end of the two-day summit later Sunday.

On Saturday the two premiers agreed that the bombing of India's embassy in the Afghan capital Kabul, plus a string of clashes along the Line of Control dividing the Himalayan region of Kashmir, had "cast a pall" on the four-year-old peace drive, Indian foreign secretary Shiv Shankar Menon said.

Singh, who met Gilani at a luxury hotel overlooking the Indian Ocean, "was relatively frank in expressing his views," said Menon.

But "both prime ministers said we need to overcome these (problems) and move forward," Menon told reporters, adding Gilani had "stressed that across the board in Pakistan, all political parties want improved relations."

Pakistani diplomats said Gilani had also met with Afghanistan President Hamid Karzai Sunday.

Karzai accuses Islamabad of backing Taliban militants, and Afghan officials have also linked Pakistan's shadowy Inter Services Intelligence (ISI) to the Indian embassy bombing -- a charge Islamabad has denied as "rubbish."

The SAARC summit saw South Asian leaders call for collective action to battle "terrorism" and improve regional cooperation. The annual event, however, is routinely eclipsed by tensions between India and Pakistan, who have fought three wars since partition.

Leaders agreed to implement a regional trade pact -- signed in 1995 but never fully implemented -- "in letter and in spirit" to ensure a free flow of goods and services between the region of 1.5 billion people.

SAARC members also noted the urgent need to develop energy and food security, and to look at cutting international telephone call charges within the region to foster closer economic ties.

The summit is being held under unprecedented security in insurgency-hit Sri Lanka, which has deployed 20,000 police and troops to guard delegates.

PHOTO CAPTION

Leaders of the South Asian Association for Regional Cooperation on August 2.

AFP