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Musharraf said all outstanding issues between the nuclear neighbors, including the Kashmir dispute, should be resolved through dialogue, The Press Trust of India reported.

The Indian side, led by Foreign Minister Pranab Mukherjee, is in Islamabad to review the peace initiatives, the first such meeting since a coalition government was installed in Pakistan after elections in February and after months of violence and political unrest.

Referring to Kashmir, an issue that has festered for six decades since the two countries became independent, Musharraf said the wishes of the Kashmiris cannot be ignored when seeking a solution to the issue. Kashmir is India's only Muslim majority state.

Mukherjee said India too is committed to the dialogue and wants to see "substantial progress on all outstanding issues" which would foster economic development in the two countries.

Mukherjee also met Asif Ali Zardari, one of the leaders in the Pakistani coalition, the state-run Associated Press of Pakistan reported. Zardari leads the Pakistan People's Party of his slain wife Benazir Bhutto.

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