(Adds Castro photo, detail, US comment on dissidents)

By Esteban Israel

HAVANA, March 20 (Reuters) - Cuba's convalescing leader, Fidel Castro, is recovering well from his July surgery and could soon take a more active role in running the country, a government minister said on Tuesday.

"We think that, as has been said, our leader is recovering, is advancing in the process of recovery, and I would say that he is already within the leadership from the point of view that he is sharing in the country's principal political and economic decisions," Yadira Garcia said.

"The expectation we all have is that, yes, we will soon have him with us in a more active way," she told a news conference at an oil and geology event.

Garcia, the minister in charge of Cuba's oil, energy and nickel industries, was the latest in a series of government officials to indicate that 80-year-old Castro's health is improving enough for him to take part in government decisions.

Her comments came as Colombian daily El Tiempo published a previously unseen photograph of Castro chatting to Nobel prize-winning Colombian writer Gabriel Garcia Marquez, a longtime friend, in Cuba last week.

Castro, wearing a red tracksuit, was standing in a sunny garden -- the first time he has been seen outside since he was taken ill. He has not appeared in his traditional olive green fatigues since he stepped down.

The last key Cold War player to defy the United States, Castro handed power to his brother Raul Castro almost eight months ago. He was recently heard speaking on the telephone with Venezuelan ally Hugo Chavez, but has yet to make a reappearance in public.

Castro stepped down on July 31 after undergoing emergency intestinal surgery. He is thought to have suffered from diverticulitis, or inflamed bulges in the large intestine, though his exact condition is a state secret in Cuba.

EYES ON APRIL

Bolivian President Evo Morales, another Castro ally, said at the weekend he was hopeful Castro would make a public appearance at an April 28 meeting in Cuba of a trade pact known as the Bolivarian Alternative for the Americas, or ALBA.

Remarks by Garcia Marquez to Spanish newspaper El Pais saying he took a long walk with Castro have fanned speculation that the iconic revolutionary could use the meeting of a handful of regional presidents to address his nation.

The trade pact between Cuba, Venezuela, Bolivia and Nicaragua aims to rival U.S.-sponsored free-trade agreements, stressing solidarity and cooperation.

Cuba's Garcia did not confirm that Castro may show up at the meeting, saying: "This is a declaration made by President Evo (Morales) and he would have some basis for doing so."

Washington, impatient to see the end of Cuban communism and watching Castro's health closely, called on Tuesday for the release of 59 dissidents jailed four years ago this month.

"It is time for Cuban authorities to stop the cycle of repression," the U.S. Department of State said, as in Cuba, relatives of the dissidents held a protest in downtown Havana.

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