* Top diplomats to meet on Thursday
* Little progress expected as distrust runs deep
* Talks overshadowed by bombing in India
* India wants to talk terror, Pakistan eyes Kashmir
By Alistair Scrutton
NEW DELHI, Feb 22 The first official talks between India and Pakistan since the Mumbai attacks offer a tiny step to stability in South Asia, but the recent bombing in Pune shows the nuclear rivals' ties may be as fragile as ever.
The two nations' foreign secretaries -- their top diplomats -- will meet on Thursday with a foreboding sense in India that the bombing of a popular bakery in the western city of Pune that killed 13 people may herald more attacks and an even greater challenge to peace.
Pune was the first Islamist militant attack on Indian soil in the 14 months since gunmen rampaged through Mumbai, killing 166 people. No one has been charged with the Feb. 13 attack, but many experts say it points to local Islamists with ties or backing from Pakistan. [ID:nSGE61D024]
"Terror is the centre and focus point of talks," Indian Foreign Minister S.M. Krishna told CNN-IBN television.
The Indian government reacted swiftly to the Pune bombing, saying the resumption of 4-year-old peace talks broken off after the Mumbai killings would still go ahead.
But more attacks like Pune may make it politically difficult for India to build on whatever progress is made on Thursday. They would also damage wider U.S. regional efforts to bring stability to Afghanistan and Pakistan.
Washington has long sought peace between the two countries, hoping it would allow Pakistan to withdraw troops from its Indian border to focus on the battle against the Taliban and al Qaeda.
"It'll help the American plan in the sense that if tension is reduced between the two neighbours, Pakistan could devote more troops to the tribal areas and to the Afghan border," said Pakistani independent analyst Hassan Askari Rizvi.
"At the moment, the statements coming from the two sides show a lot of divergence."
In a sign of the gulf between the two neighbours, Krishna's statement last week immediately irked many in Pakistan.
Krishna wants Pakistan to show it is serious in reining in Islamist groups behind the Mumbai attacks before New Delhi even considers talking about other issues that have strained ties.
But Pakistan wants those other issues, namely talks on the disputed region of Kashmir as well as concerns such as shared water sources, to be on the table.
Many in Pakistan are worried by what they see as India's growing belligerent tone, especially some comments from military commanders, as well as the Asian giant's arms build-up. Some Pakistani analysts say that India, buoyed by its stronger ties with Washington, feels it can be more assertive with Islamabad.
"There will be no breakthrough," said Amitabh Mattoo, professor of foreign policy studies at Jawaharlal Nehru University in New Delhi. "It is an exploration of where dialogue can go."
For Indian Prime Minister Manmohan Singh, the talks are a politically risky move, opening him up to criticism that he is soft on terrorism. He was forced to backtrack the last time his government reached out to Pakistan at a summit in Egypt in 2009. But Singh, a 77-year-old seen as searching for a legacy, has pushed talks. India's new national security adviser, Shiv Shankar Menon, a former foreign secretary seen as less hawkish than his predecessor, has also helped India's initiative.
There is also a sense in India that Pakistan has made some real progress in probing the suspected masterminds behind Mumbai.
"Menon as NSA (national security adviser) is a crucial element, and the fact that the trial (in Pakistan) has moved on and that India's internal security mechanisms are falling into place," said Siddharth Varadarajan, strategic affairs editor at the Hindu newspaper.
But attacks like Pune would push them on to the defensive.
Security analysts in India say that there are signs that the U.S. diplomatic pressure that fell on Pakistan after the Mumbai raids -- which in their view was the reason India suffered no Islamist militant attacks in 2009 -- is now on the wane.
Pakistan appears now to have a diplomatic edge, with signs it will become central for Washington to mediate any talks with the Taliban and any drawback of troops in the coming years.
"That has given Pakistan greater encouragement that it is returning to centre stage in the region's security architecture," said Ajai Sahni, Executive Director at the New Delhi-based Institute for Conflict Management.
Still, having talks may be better than silence. It gives India the tool to break them off if a second Mumbai-like attack comes. No talks gives New Delhi less room to react.
"The Indian government is very keen to get off the edge," said Varadarajan. (Additional reporting by Kamran Haidar and Chris Allbritton in Islamabad; Editing by C.J. Kuncheria and Nick Macfie)