Pakistan's troubled foreign relationships scenarios have improved in recent months, said a top diplomat on Saturday, pointing to forthcoming trade talks with New Delhi and a broad agreement on regional security goals with Washington as evidence.

Foreign Minister Hina Rabbani Khar, in an exclusive interview with Reuters, said negotiations to normalize trade with India would allow progress on other issues between the two nuclear-armed South Asian rivals. Trade has long been tied to political issues between the neighbors, who have fought three wars since independence from Britain in 1947.

I think it's broadly agreed that we need to make some simultaneous progress on these issues, she said.

The hope is that an increase in trade will feed into wider trust between the two countries and help them resolve major flashpoints, like the disputed Kashmir region, although a solution to this problem has proved intractable for decades.

...there has been a great improvement in the environment, Rabbani Khar added, I think we can move forward.

The Foreign Minister strongly denied that Pakistan was not committed to finalizing Most Favored Nation (MFN) status for India, as alleged by an unnamed Indian government official on Friday, who said Islamabad was backtracking on the issue in the face of domestic opposition.

There is absolutely no question of backtracking of cabinet approval of trade normalization with India, she said, I want to completely dismiss any indication that there's any retraction on what we said.

Pakistan recently announced it would upgrade India to a Most Favored Nation - a move that could help normalize commercial ties by ending heavy restrictions on what India is allowed to export across the border.

Wednesday's announcement was trumpeted on both sides as a milestone in improving relations shattered by attacks by Pakistan-based militants in Mumbai in 2008. Formal peace talks, known as the composite dialogue, resumed in February.

Rabbani Khar said the two countries' Commerce Secretaries would meet in mid-November to hammer out details of the trade agreement but that there was no lack of commitment to the agreement itself.

The cabinet very clearly gave them a way forward, which is trade normalization with India, she said. Pakistan Prime Minister Yusuf Raza Gilani also rejected charges of backtracking.

Less than one percent of India's merchandise exports are sold to Pakistan, in terms of dollar value. However, in September, a joint statement pledged to double bilateral trade flows within three years to about $6 billion.

Lasting peace between the two countries is seen as key to stability in the South Asian region and to helping a troubled transition in Afghanistan as NATO-led forces plan their military withdrawal from that country in 2014.

Rabbani Khar also spoke about the fact that Pakistan's relations with the United States were on the mend, with a complete convergence of stated interests on Afghanistan.

Nothing would make us happier than a strong government in Afghanistan, she said, I look at the last few weeks, and relations with the U.S. have been generally positive. It's basically the operational details to agree on.

The United States and its allies in Afghanistan have been pressing Pakistan for years to tackle the Haqqani network, a powerful insurgent group which says it owes allegiance to the Afghan Taliban but has traditionally been seen as close to Pakistan's spy agency.

Pakistan denies supporting the Haqqani network and attributes its lack of action against the group to the fact that its army is already overstretched fighting Pakistani Taliban militants and others.

At an Istanbul conference in early November focusing on stabilizing Afghanistan, a senior U.S. official said that Pakistani action against the Haqqani network did not necessarily need to be military.

Instead it could include ensuring that intelligence doesn't go to the Haqqani network and that they don't benefit from financial resources or flow of finances.