COLOMBO, August 3, 2008 (AFP) - The leaders of Afghanistan and Pakistan agreed Sunday to 're-engage' in the fight against Islamic extremism, a joint statement said, after ties had soured following an attack on the Indian embassy in Kabul.

Afghan President Hamid Karzai and Pakistan Premier Yousuf Raza Gilani met in Colombo on the sidelines of a South Asian summit, according to a joint statement released here.

'The two sides agreed to coordinate their efforts to stop cross-border terrorism,' the statement said.

'At the suggestion of Pakistan, the Afghan side agreed to re-engage on all bilateral and multilateral forums,' it added.

Karzai directly accused Pakistan's intelligence agency of involvement in the July 7 suicide attack on India's embassy in Kabul. The blast killed more than 60 people, including two Indian diplomats.

A week later Kabul announced it would boycott a series of meetings with Islamabad in protest.

Islamabad has denied its Inter-Services Intelligence was involved in the attack, a charge also made by New Delhi and, reportedly, US government officials.

Karzai and Gilani had also agreed after their 'cordial' breakfast meeting that their foreign ministers would meet over ways to build 'close and constructive engagement' between the neighbours, the statement said.

The aim was to 'build confidence and develop a common strategy at the political, military and intelligence levels in collaboration with their coalition partners and NATO/ISAF,' it said.

NATO's International Security Assistance Force (ISAF) has around 52,000 troops in Afghanistan, helping the government to fight attacks by insurgents that officials say are heavily supported by extremist elements in Pakistan.

The Afghan government says the fight against the rebels should be tackled at its roots in Pakistan instead of Afghanistan becoming a battlefield.