ISLAMABAD -- Two years after nuclear-armed India and Pakistan nearly went to war, their leaders agreed yesterday to hold landmark peace talks next month on all topics, including the hot-button issue of Kashmir that lies at the heart of their half-century of mutual hatred and mistrust. "I think the victory is for the world," Pakistan's President Gen. Pervez Musharraf declared, although observers cautioned a lasting peace is far from assured.

Musharraf and Indian Prime Minister Atal Bihari Vajpayee agreed to the talks in tightly guarded meetings in the Pakistani capital under the cover of a major regional summit.

In a joint declaration read separately by the Indian and Pakistani foreign ministers, Musharraf pledged not to let his country be used as a haven for terrorism and Vajpayee promised to seek a solution to the Kashmir dispute.

Gone were the usual Pakistani denials that it had supported Islamic militants fighting Indian rule in the disputed Himalayan territory and gone were Indian demands that cross-border infiltration stop before a dialogue could begin.

Canadian Foreign Affairs Minister Bill Graham called the meeting "an important step toward finding a peaceful solution to their outstanding issues."

The two leaders had agreed to meet while attending a summit here of the South Asian Association for Regional Co-operation.

"Canada has strongly encouraged a dialogue between the two countries and I urge them both to build on the momentum generated by the successful SAARC Summit," Graham said in a statement yesterday.

More than 65,000 people have died since 1989 in the conflict over Kashmir, a picturesque Muslim-majority region divided between India and Pakistan and claimed in entirety by both. Islamic rebels have been fighting for independence for the part of Kashmir controlled by predominantly Hindu India or for its merger with mostly Muslim Pakistan.

Details on the talks, including location, were still to be worked out.