UPDATE 3-Venezuela signals thaw with Colombia
* Chavez sends greetings to incoming Colombian president
* Lula and Kirchner seek solution to dispute
* Venezuela's relations with United States deteriorate (Recasts with Kirchner, Chavez comments)
CARACAS, Aug 6 (Reuters) - Venezuela's foreign minister will attend the inauguration of Colombia's incoming president, Juan Manuel Santos, on Saturday, signaling a thaw between the Andean neighbors after relations broke over leftist rebels.
The socialist Chavez severed ties last month and announced he was sending troops to the border when the outgoing government of President Alvaro Uribe, a close U.S. ally, said Venezuela tolerated Marxist rebel camps on its territory.
The latest spat was widely seen as a parting tussle between two ideologically opposed leaders who have long bickered over guerrillas and a U.S. military presence in Colombia. So the warmer words ahead of Santos' swearing-in came as no surprise.
"We are very optimistic," Chavez told reporters about prospects for less antagonism with the new government.
Uribe leaves office after eight years as Colombia's most popular president in history for pushing the widely loathed Revolutionary Armed Forces of Colombia (FARC) rebels into remote rural areas.
Relations between Chavez and Uribe soured after Colombia bombed a guerrilla camp in Ecuador two years ago and bilateral trade has withered since 2009, hurting both economies.
Though Chavez is not expected at Saturday's ceremony, he has made clear he hopes for better ties with Santos, who is under pressure from exporters to normalize business with the nation's main local market worth billions of dollars annually.
"It is very likely Nicolas will be there tomorrow at the swearing-in," Chavez said of his foreign minister, Nicolas Maduro. He was speaking before a meeting with Brazilian President Luiz Inacio Lula da Silva and former Argentine President Nestor Kirchner.
Kirchner later said of Maduro: "Yes, he will go."
LULA, KIRCHNER TRY TO MEDIATE
Lula and Kirchner were visiting Chavez to negotiate an end to the dispute between the two oil-producing nations before heading to the inauguration in Colombia.
"I beg you to carry my greetings to the new president of Colombia and thank you for always being concerned," Chavez said to Lula, a close ally.
Despite his plans to follow Uribe's strategy of defeating the Marxist guerrillas with force, Santos has vowed to normalize relations with Venezuela.
In the medium term, friction is likely because Colombia believes Chavez shelters rebels, allowing cross border attacks on its security forces. Chavez feels threatened by a deal to allow U.S. troops more access to Colombia's military bases.
In his last weeks in office, Uribe has been increasingly outspoken in his criticism of Chavez, angrily accusing him of tolerating top FARC commanders while making indirect criticisms of Venezuela's socialist economic and political model.
On Friday, his last day in power, Uribe's vice president reiterated his position that any improvement in relations must come with serious moves by Caracas to deal with the alleged guerrilla presence.
"Obviously we want better relations," Vice President Francisco Santos said. "We hope this is the beginning of a solution, but a solution where the problems at the root of this are resolved and not left on the sidelines."
Last week, Chavez said he sent air defense units and troops to the border with Colombia, claiming an attack was imminent. Uribe said no attack was planned and accused Chavez of deceiving his own people.
At the same time Chavez makes overtures to Santos, relations with the United States have suffered.
On Friday, Chavez warned he could block Washington's nominee for ambassador in Caracas, Larry Palmer, who said the government's links to the FARC were more than clear and criticized the armed forces. ( Additional reporting by Eyanir Chinea in Caracas and Pat Markey in Bogota; editing by Andrew Cawthorne and Sandra Maler)