The United States will do all it can to broker dialogue between India and Pakistan, Secretary of State Colin Powell said in remarks released here Saturday.

Powell praised both sides for standing down troops from a high state of alert which last year provoked fears of the world's first nuclear exchange, in an interview with Radio Pakistan.

"I also congratulate the leaders of the two countries for recognizing that it was more important to find a peaceful way forward and to begin a demobilization, which is well underway," Powell said.

"I do understand, however, that there is a need for dialogue to take place between India and Pakistan on all of the outstanding issues between those two nations, and especially the issue of Kashmir.

"The United States will continue to do everything we can to get a dialogue started," he said in the telephone interview conducted on Friday.

Powell has made several peace

shuttle missions to South Asia in the last 18 months and conducted a blizzard of telephone diplomacy, to persuade both bitter rivals to step back from confrontation.

Meanwhile, Pakistani President Pervez Musharraf said Sunday he was willing to join hands with rival India to fight extremism, but warned he would lose power if he compromised too much over Kashmir.

"If someone says in a positive manner that we want to solve it, then we are together on this issue of controlling every extremist," Musharraf told the Indian Hindi-language news channel Aaj Tak in an interview broadcast Sunday.

But he added that India and Pakistan should resume talks to "set the strategic direction" in the fight against extremism.

"Then we will solve this problem and all problems," he said.

Dialogue between India and Pakistan has been stalled for more than a year with tensions spiralling after an attack on India's parliament complex in December 2001.

India blamed the attack on

Pakistan-based Islamic extremists and the two sides deployed a million troops to their borders. The troops began to pull back in October after India said Musharraf had promised a US envoy he would stop support for the Islamic insurgency against Indian rule in Kashmir.

In the interview, Musharraf warned that no Pakistani leader could survive if he brushed aside the half-century Kashmir dispute and began mending relations with India in other areas such as trade.

"You need to understand the pulse of Pakistan. No Pakistani leader can come into politics and survive if they start doing all kinds of things with India -- talking trade, commerce, economy with India. He will be kicked out," Musharraf said.

"Let us understand the ground reality and let us start talks. Let us start talks on all issues including Kashmir."

New Delhi says Islamabad trains and funds rebels fighting for 14 years in Kashmir, a third of which is also administered by Pakistan.