Nicosia  - Leaders on expressed their hope on Wednesday of clinching a deal at ending a decades-old conflict and reunite the eastern Mediterranean island following a new round of peace talks.

Greek Cypriot President Dimitris Christofias, representing southern Cyprus and Turkish Cypriot President Mehmet Ali Talat, representing the northern third of the island, met for two hours inside the UN- patrolled buffer zone that separates the two communities.

The two men emerged from the talks which were held in the presence of Special United Nations envoy Alexander Downer saying that they were confident they will reach a settlement. The leaders said they will meet again on September 11.

Christofias said the leaders had a "common will and common desire" to reach a settlement but warned that "there are no guarantees."

The leader of the Turkish Cypriots said "we are confident we will succeed in concluding a comprehensive agreement as soon as possible and hopefully this year."

"Of course Ankara is supporting the solution," Talat added, pushing aside speculation that Turkey, a guarantor of the island's 1960 independence agreement could block any concessions in the negotiations.

Peace talks have been deadlocked after former president Tassos Papadopoulos led the Greek-Cypriot rejection of a UN reunification plan in a 2004 referendum.

Turkish Cypriots had overwhelmingly voted in favour.

With newly elected Christofias in office, expectations are running high for a breakthrough in efforts to reunite the island, which has been divided since 1974 when Turkey invaded the northern third in response to an Athens-led coup to annex the island to Greece.

In a recent effort to illustrate their commitment to peace, Christofias and Talat jointly opened a north-south crossing point in the heart of the divided capital in April, which had come to signify the island's division.

"With respect to the work of the technical committees, you have already agreed on a number of measures to improve the daily lives of Cypriots. The timely implementation of these measures will show Cypriots in practical ways that the communities can live together and will also help give you the political space to move forward," UN envoy Downer told the leaders at the start of the talks.

Downer said that the two Cypriot leaders had a duty to persuade their communities that a solution would benefit both sides.

The two sides have agreed in principle to reunite the island as a federal state composed of two constituent states, which would guarantee the equality of both communities.

Both sides will focus on the complex list of issues dividing the two sides, meeting at the site of the abandoned, bullet-riddled former airport in the UN buffer zone, ranging from territory and property disputes from more 250,000 people who have lost their homes to future governance of the island.

Christofias and Talat said any agreed solution would be put to separate, simultaneous referenda in the north and the south.

The talks were welcomed by the Council of Europe.

"The talks which have opened today represent the best opportunity in many years to end the division of Cyprus. The opportunity must not be wasted," according to Joachim Hoerster, the rapporteur of the Council of Europe Parliamentary Assembly (PACE).

"Difficult compromises will have to be found, but I urge both sides to continue showing the political will and determination that will be needed for success. The Council of Europe is ready to help, including with measures to build confidence between the two communities. The people of Cyprus have been divided for too long." (dpa)