HIGHLIGHTS: Despite an Easing of Tensions Each Side Waiting for the Other to Make Next Move||Musharraf: 'Situation Remains Grim Until Disengagement on Borders Takes Place.'||No Final Decision on Checking Cross-border Infiltrations|| STORY: U.S. Defense Secretary Donald Rumsfeld met Pakistan's President Pervez Musharraf on Thursday to try to avert a war with India as officials said four people died in Kashmir in heavy firing between the two sides. (Read photo caption)

After intense Western diplomatic efforts, Pakistan has promised to prevent militants crossing into Indian-held Kashmir to continue a 12-year separatist revolt there.

In return India has recalled its warships from near Pakistani waters, reopened its airspace to Pakistani flights and named an ambassador to Islamabad to replace one recalled in December.

Despite an easing in tensions, both India and Pakistan are saying it is up to the other to make the next move.

REDUCING RISK OF NUCLEAR WAR

And with their armies on the border and the ever-present possibility of another militant attack, the U.S. has thrown its diplomatic might into reducing the risk of a conflict which some fear could escalate into the world's first nuclear war.

The two sides have exchanged almost daily firing across the line of control dividing their armies in Kashmir.

India reported on Thursday two officers and a civilian were killed by Pakistani mortar and heavy machinegun fire, while Pakistan said a 23-year-old woman was killed on its side of the line of control by Indian mortar fire.

India is looking for proof the infiltrations have stopped and is pressing for guarantees that an end to what it calls "cross-border terrorism" will be permanent.

Pakistan wants talks with India to resolve their differences over the mainly Muslim region -- the cause of two of the neighbours' three wars since independence from Britain in 1947.

"The situation will remain grim till we disengage on the borders," Musharraf said on Wednesday after talks with Saudi Crown Prince Abdullah on a visit to Jeddah.

PAKISTAN DENIES AL QAEDA LINK SUGGESTED BY WASHINGTON AND NEW DELHI

On Wednesday, Rumsfeld said al Qaeda militants might be operating in Kashmir, adding another potentially explosive element to an already volatile mix.

"I do not have hard evidence of precisely how many, or who, or where," added Rumsfeld, who had earlier warned that al Qaeda might try to provoke a war between India and Pakistan.

Pakistan presidential spokesman Rashid Qureshi said the U.S. suggestion was "absolutely incorrect."

"I don't know where they got this from," he told Reuters. "It seems they believed Indian propaganda."

The U.S. Defense Secretary also said India and the United States discussed the use of electronic ground sensors to check on cross-border infiltrations but had come to no conclusions.

BACKGROUND TO CONFLICT

In Pakistan, Musharraf faces a delicate balancing act trying to avoid war without angering domestic opinion by seeming to abandon the Kashmiri people.

The dispute over the Himalayan region is a legacy of the hurried partition by departing British colonial rulers of the Indian subcontinent into Islamic Pakistan and secular but mostly Hindu India at independence in 1947.

Kashmir's Hindu ruler controversially acceded to India after partition but India's then Prime Minister Jawaharlal Nehru promised the Kashmiri people a plebiscite to decide on their future status, a pledge backed by subsequent U.N. resolutions.

After elections in the region in 1997 widely seen as rigged, Muslim militants began a violent separatist revolt, which has provoked an equally violent response by Indian security forces, who have been accused of massive human rights abuses.

But Pakistan's support for the rebellion has backfired, and the involvement of Islamic radicals from Pakistan and abroad has been a massive public relations disaster, especially after September 11.

PHOTO CAPTION

Pakistan President Pervez Musharraf gives a press conference in Abu Dhabi, United Arab Emirates, Tuesday June 11, 2002.
Musharraf on Tuesday said India has begun defusing war tensions, but the core issue - dialogue over Kashmir - remains unresolved. (AP Photo/WAM)