By Y.P. Rajesh

NEW DELHI, Sept 26 (Reuters) - India called for political reform in Myanmar on Wednesday following Western appeals for it to try to persuade its neighbour's ruling generals to talk to their opponents staging huge street protests.

Foreign Minister Pranab Mukherjee's call for reform was the first high level comment by India -- seen as having significant influence because of its close ties with Myanmar -- since the latest protests erupted in the isolated state.

"We are concerned at the situation in Myanmar and are monitoring it closely," Mukherjee said in his statement. "It is our hope that all sides will resolve their issues peacefully through dialogue.

"As a close and friendly neighbour, India hopes to see a peaceful, stable and prosperous Myanmar, where all sections of the people will be included in a broad-based process of national reconciliation and political reform."

His comments came after the West called urgent consultations in the U.N. Security Council and big powers condemned the use of force by Myanmar authorities against pro-democracy demonstrators staging the biggest anti-junta protests in 20 years.

India, along with China and members of the Association of South East Asian Nations (ASEAN), is considered to have some leverage over the former Burma where two monks and a civilian were reported killed in the protests.

A joint EU-U.S. statement issued at the U.N. earlier on Wednesday called on China, India and ASEAN to use their influence to press the junta to open talks with opponents.

New Delhi had traditionally said it would not interfere in what it said was the internal affairs of another country.

Mukherjee, who is in New York to attend the U.N. General Assembly, said Myanmar's process of national reconciliation, initiated under a roadmap drawn by the military rulers before this month's protests, should be expedited.

India shares a 1,645-km (1,000-mile) border on its east with Myanmar and relations between the neighbours go back centuries to the time Buddhism was born in the subcontinent and spread across the region.

Although New Delhi initially supported Nobel laureate Aung Suu Kyi's National League for Democracy, it changed its strategy in the early 1990s to court the military regime in what is seen as an effort to counter rival China.

It has invested in developing ports, building roads and railways and is also competing with Beijing for Myanmar's oil and gas reserves. The two countries have also exchanged several high-level visits in recent years.

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