Panama City :  Hours after shaking hands, US President Barack Obama and Cuban leader Raul Castro head into historic talks in Panama on Saturday in their efforts to bury decades of animosity.

Taking their bid to restore diplomatic ties to a new level, Obama and Castro will have a discussion on the sidelines of the Summit of the Americas in Panama City, according to US officials.

The two leaders already said hello late on Friday, greeting each other and shaking hands — a gesture rich in symbolism — as UN chief Ban Ki-moon and other leaders looked on, before the 35-nation summit’s inauguration.

They shook hands only once before, at Nelson Mandela’s memorial service in 2013.

The face-to-face talks will be the climax of their surprise announcement on December 17 that, after 18 months of secret negotiations, they would seek to normalise relations between the United States and Cuba that broke off in 1961.

The last time US and Cuban leaders met was in 1956, three years before Fidel Castro came to power. “We’re in new territory here,” said senior Obama advisor Ben Rhodes, referring to the flurry of diplomacy that included Thursday the first meeting between US and Cuban foreign ministers since 1958.

“This is not just about two leaders sitting down together,” he said, citing Obama’s decision to ease trade and travel restrictions with communist Cuba. “It’s about fundamentally changing how the United States engages Cuba — its government, its people, its civil society.”

The format of the meeting has yet to be confirmed, but Rhodes said the two leaders would likely talk about the negotiations to restore diplomatic ties as well as lingering disagreements.

“As we move toward the process of normalisation, we’ll have our differences, government to government, with Cuba on many issues,” Obama told a regional civil society forum on Friday. “There’s nothing wrong with that.”

Cuba has demanded to be removed from a US list of state sponsors of terrorism before embassies can reopen, noting that this has blocked the country’s access to bank credit.

The White House indicated that Obama was not yet ready to decide whether to remove Havana from the blacklist, but that it could not rule out an announcement in Panama.

“The potential removal from the list will represent the current US-Cuba relationship becoming more pragmatic,” said Diego Moya-Ocampos, Americas analyst at US consultancy IHS Country Risk.

“This is a limited but significant step,” he said. “But overall engagement will still be limited by the US embargo.”

Obama has urged the US Congress to lift the embargo on Cuba, which was imposed in 1962, barring most trade with the island as well as tourism.

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