By Sudipto Ganguly and Amlan Chakraborty
MOHALI, India (Reuters) - The prime ministers of nuclear-armed foes India and Pakistan stood side by side on Wednesday at a World Cup cricket match and clapped to each other's national anthems in a symbolic gesture aimed at rebuilding ties shattered by the 2008 Mumbai attacks.
The leaders shook hands with the two teams in the northern Indian town of Mohali at a semi-final match between the South Asian neighbors that have gone to war three times since Independence in 1947.
"I think every such meeting between the leaders of the two countries generates an extremely positive momentum," Indian Foreign Secretary Nirumpama Rao told a news conference during the match. "I would like to emphasize this is re-engagement between India and Pakistan."
Such is the fervor surrounding cricket in the two countries that scores of Pakistanis crossed one of the world's most militarized borders, helped by relaxed visa rules, to get to the stadium, while millions of Indians took the day off work to watch the game.
"Enjoy Cricket, It's Not War!" was the front page splash of India's Mail Today newspaper . It was the first time since the Mumbai attacks that the two teams have met on one of their home grounds.
Prime Minister Manmohan Singh had invited his counterpart, Yusuf Raza Gilani, to watch the game and discuss reviving the peace process, although "cricket diplomacy" will offer more in the way of gestures than breakthroughs in the decades-old conflict.
Attacks in Mumbai in 2008 heightened distrust between the two countries, which have fought over disputed Kashmir for decades, a conflict heightened by a host of other issues from border skirmishes and conflicts over water.
New Delhi blames Pakistani militants in collusion with elements of the government, including Pakistan's spy agency, for the Mumbai assault, which killed at least 166 people.
But concerned about his legacy, the 78-year-old Singh has pushed for reconciliation with Pakistan despite misgivings within his government.
In a major confidence-building measure ahead of the match, Islamabad agreed on Tuesday to let Indian investigators travel to Pakistan to probe the Mumbai attacks.
"As far as our relations are concerned, I'm happy our talks have resumed and interior (home) secretaries' talks were held in a positive manner," Gilani said, referring to talks between senior officials this week.
"Dr. Manmohan Singh is a very good politician. His approach is very positive and he wants to do something for peace and prosperity of this region so we both are committed that the environment should improve and we could serve people."
The leaders left the match after about two hours of play and were due to return to the stadium for dinner, an organizer said.
THE BIG MATCH
The two cricket-crazy South Asian nations have talked of little else for the past week in a build-up that has put the spotlight on, among other topics, players' preparedness, a row over match-fixing and public prayers for victory.
"Cricket diplomacy" is nothing new. In 2005, Pakistan's then military ruler, Pervez Musharraf, traveled to India to watch a similar match but the trip effectively turned into a summit with Singh, with the two leaders agreeing to open up the militarized frontier dividing the disputed Kashmir region.
Indian army helicopters and anti-aircraft guns have imposed a no-fly zone over the Mohali stadium, a few hours' drive east of the Pakistani border, to prevent an attack by militants.
Across India, traffic on normally crowded streets was thin. Pubs screening the match on wide screens erupted into cheers as Indian batsmen hit sixes and fours, and fans celebrated the boundaries by downing drinks and dancing with abandon.
"I tell everybody: 'you should not fight at the border, rather the battles should be fought on the cricket grounds.' That's what people from both countries love to see," Mohammad Bashir Khan, a Pakistani supporter from Chicago, told Reuters after flying into India for the showpiece event.
Many companies in both countries declared Wednesday a half-day for work. The Karachi stock exchange put a big screen up for traders to watch. Lawmakers in India's eastern Bihar state asked for a suspension of legislative business during the match.
"This is a more important event than any other event for Pakistan this year," said Omar Ehtisham Anwar, a fund manager at Faysal Asset Management in Karachi who has taken the day off to watch the match.
"There is no way I would miss even a second of this match -- I will try to not even blink during the game."
The winner of what has been dubbed the "mother of all matches" will play Sri Lanka in the final in Mumbai on Saturday.
SINGH'S POLITICAL FORTUNES
For Singh, the match may be a way of regaining the policy initiative after his government was battered by months of corruption scandals that could dent the ruling Congress party's chances in upcoming state elections.
Both sides will hope to ride a wave of goodwill ahead of talks between their foreign ministers in July, but some were skeptical about cricket diplomacy , which was tried as far back as 1987, without bringing lasting peace.
"It facilitates resolution, it doesn't lead to resolution," former Pakistani President Musharraf told the Indian news channel Times Now. "Cricket diplomacy doesn't mean that you can resolve disputes just because you attended a match together."
(Writing by Matthias Williams; additional reporting by Kamran Haider in Islamabad and Sahar Ahmed and Faisal Aziz in Karachi, editing by Alistair Scrutton and Alan Raybould)