KHARTOUM, May 18 (Reuters) - The new head of the African Union said on Sunday he was optimistic tensions between Chad and Sudan would ease, after holding talks in both countries.

Sudan cut diplomatic relations with Chad last week, blaming it for an attack on Khartoum which killed more than 200 people. Chad denies responsibility and has accused Sudan of masterminding attacks on N'Djamena in the past.

"We are confident ... that we are going to engage in a process of de-escalation concerning Chadian-Sudanese relations," AU chief Jean Ping told reporters in Khartoum after two hours of talks with President Omar Hassan al-Bashir.

Ping arrived on his first mission to Sudan from the Chadian capital at the weekend after talks with President Idriss Deby.

"I got information coming from the two capitals which made me optimistic," he said, declining to give any further details.

Ping said the African Union should investigate accusations by Sudan and Chad of support for rebels in their respective countries.

After the attack on Khartoum by the Darfur rebel Justice and Equality Movement (JEM), whose leader is from the same tribe as Deby, Sudan branded the insurgents a "terrorist organisation" and said it would not negotiate with them.

Ping said the peace process, mediated by the African Union and the United Nations, would not stop.

"We should engage in negotiations in order to gain peace in that region so the necessary action will be taken," he said.

JEM moved some 400 miles (600 km) from Darfur bordering Chad to attack the western suburb of Omdurman. It was stopped only at the bridges over the river Nile to the army headquarters and the Presidential Palace.

It was the first time rebels from Sudan's regions complaining of neglect had brought their conflict to the capital in decades of civil war.

Sudan put weapons and vehicles captured from the rebels on display in Omdurman, and on Sunday the interior ministry said six people had been injured after high temperatures caused a Katyusha rocket among them to explode a day earlier.

It said the weapons were secure. Dozens of people have been killed across Sudan by explosions at weapons depots. (Reporting by Opheera McDoom; editing by Philippa Fletcher)

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