NEW DELHI, July 15 (Reuters) - India's prime minister said on Sunday the divided region of Kashmir could become a symbol of India-Pakistan co-operation, and talks to end 60 years of conflict would continue. Manmohan Singh restated his position that "borders cannot be changed, but they can be made irrelevant", as he accepted an honorary degree in Jammu, the winter capital of the Indian state of Jammu and Kashmir.

"There can be no question of divisions or partitions, but the Line of Control can become a line of peace with a freer flow of ideas, goods, services and people," he said in a speech e-mailed to Reuters.

The South Asian nuclear-armed neighbours claim Kashmir in full but rule it in parts, and have fought two wars over it.

The Line of Control divides the Indian and Pakistani ruled parts of Kashmir.

"I hope and believe that Jammu and Kashmir can, one day, become a symbol of India-Pakistan co-operation rather than of conflict," Singh added.

"It goes without saying that this can only happen once terrorism and violence end permanently ... We are firm in our resolve to fight terrorism and to end the blackmail of terror in this peace-loving state," Singh added.

India has long accused Pakistan of aiding and fomenting separatist militants fighting New Delhi's rule in Kashmir, where an anti-India revolt began in 1989.

Officials from both countries met earlier this month for their first security talks in over a year but they were cut short after Pakistan's delegation returned to Islamabad as trouble flared at the besieged Lal Masjid.

Peace talks launched in 2004 have made slow progress with some Indian officials saying that Pakistan's President Pervez Musharraf's domestic political troubles had changed his priorities.

"We will also continue our dialogue with Pakistan, despite difficulties ... because I genuinely believe that there is no alternative but to work for building peace," Singh said in Jammu.

He said that a series of roundtable meetings involving pro-Indian politicians from Kashmir and government officials had "emerged as an effective platform for addressing all the concerns of the people of Jammu and Kashmir".

He urged separatist groups to end their boycott of the talks.

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