ISLAMABAD, Sept 18 (Reuters) - Pakistan's President Asif Ali Zardari is expected to meet Indian Prime Minister Manmohan Singh in New York this month, a cabinet minister said on Thursday, for their first talks since Zardari became president.

Zardari replaced Pervez Musharraf as president this month. Musharraf managed relations with old rival India for nearly a decade, and since early 2004 he oversaw a peace process between the nuclear-armed neighbours which brought better relations.

But ties have become more tense in recent months following a series of violations of a five-year-old ceasefire on their border in the disputed Kashmir region, and a July bomb attack on India's embassy in Kabul that India blamed on Pakistan's spy agency.

Singh said last month the Kabul bombing had cast a shadow over the peace process.

Pakistani Foreign Minister Shah Mehmood Qureshi rejected a suggestion the process had come to a halt but said a meeting between Singh and Zardari on the sidelines of the U.N. General Assembly was necessary.

"The meeting in New York, I feel, is required because we have to continue to pursue the peace process," Qureshi told a news conference in Islamabad.

"Yes, there will be difficulties, yes there will be hiccups, and there have been hiccups in the past as well, but we do not have to lose direction ... I am expecting a productive meeting." Pakistan denied any involvement in the Kabul bombing but India expressed its concern about the possibility of Pakistani support for militants after bomb attacks in New Delhi on Saturday.

Speaking at a meeting in the Indian capital on Wednesday, Singh acknowledged home-grown militant groups were now carrying out bombings in India, but also said the role of Pakistan-based groups could not be minimised.

"We have reports that certain Pakistan-based terrorist outfits are constantly seeking to set up new terrorist modules within our country. This is a matter of utmost concern," he said.

India accuses Pakistan of arming, abetting and sending insurgents across the border into Indian-controlled Kashmir, where militants have been fighting security forces since 1989.

Pakistan says it only offers political support to what it calls a legitimate freedom struggle.

Qureshi suggested an end to what he called a blame game.

"Without solid evidence, if we get into the blame-game, in my view, it will be counter-productive," he said.

Qureshi said both Pakistan and India have suffered from the menace of terrorism, and the groups claiming responsibility for recent attacks in India had nothing to do with the Kashmir dispute.

"I don't know what agenda they have but you can't point fingers at Pakistan," he said. (Reporting by Augustine Anthony; Editing by Robert Birsel and Jerry Norton)

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