The prime ministers of India and Pakistan were to meet on Thursday on the sidelines of the Non-Aligned Movement summit, sparking hopes of a resumption of peace talks between the nuclear rivals.
Yousuf Raza Gilani of Pakistan and Manmohan Singh of India were to meet at the summit venue in the Red Sea resort of Sharm el-Sheikh, where more than 50 heads of state from the developing world are gathered for a two-day summit that began on Wednesday.
Relations between India and Pakistan, who have fought three wars, worsened dramatically after last year's bombings in the Indian commercial capital Mumbai which killed 166 people and were blamed by New Delhi on the banned Pakistani militant group Lashkar-e-Taiba(LeT).
Singh has voiced hope that Pakistan will promise action against those behind the attacks when he meets Gilani for the second high-level talks between the two sides since the Mumbai raids.
Pakistan on Wednesday expressed some optimism over the direction relations were taking.
"There has recently been some forward movement in our relations with India," Gilani told participants at the summit.
"We hope to sustain this momentum and move towards comprehensive engagement. We believe durable peace in South Asia is achievable," he said.
The Mumbai siege left in tatters a fragile peace process launched in 2004 to resolve all outstanding issues of conflict between the neighbours, including a territorial dispute over the divided Himalayan territory of Kashmir.
Peace "will be facilitated by the resolution of all outstanding disputes, including Jammu and Kashmir," Gilani said.
Indian foreign secretary Shiv Shankar Menon has been holding talks with his Pakistani counterpart Salim Bashir since Tuesday in preparation for the meeting between Singh and Gilani.
Menon told a press conference on Wednesday night that the talks were continuing.
"We have had good detailed discussions. We are still in the process of talking to each other," he said.
Singh has voiced hope that Pakistan will promise action against those behind the attacks when he meets Gilani for only the second high-level contact between the two sides since the Mumbai bombings.
Pakistan has said that it would "probably" put the five accused of involvement in the attacks on trial next week.
More than 50 heads of state from the developing world are gathered at the summit to tackle the fallout from the global economic meltdown, with calls for a "new world order" to prevent a repeat of the crisis.
Cuban President Raul Castro said in a speech at the opening session on Wednesday that the financial crisis had hit developing nations the hardest.
"Every country in the world must seek just solutions to the global economic crisis," Castro told the 118-member body.
"We call for a new monetary and economic world order... we must restructure the world financial system to take into consideration the needs of developing countries."
India said members should play a bigger role on the world stage.
"Developing countries must be fully represented in the decision-making levels of international institutions," Singh said.
India, along with host Egypt, is one of the founding members of the NAM, the largest grouping of countries outside of the United Nations, aimed at giving a voice to the developing world.
Founded in 1955, NAM's 118 member states represent around 56 percent of the global population. NAM states consider themselves not formally aligned with or against any major power bloc.