Brussels, Jun 5 (IANS): The European Union (EU) has welcomed the resumption of talks between India and Pakistan and hoped this would help resolve their outstanding issues, EuAsiaNews reported.

"The EU reiterated the importance of Pakistan and India normalising their relations and welcomed the resumption of a dialogue process. It expressed hope that this would help to resolve outstanding issues and build trust and confidence between the two neighbours," the EU and Pakistan said in a joint statement after their second summit here Friday.

The EU said it wanted a constructive engagement with Pakistan and pledged to hike development funding to 75 million euros (about 8 billion Pakistani rupees) annually for 2011-13.

The two sides also agreed on a framework to strengthen their strategic dialogue. The five-year engagement plan covers political, security, economic and development issues.

"The EU is Pakistan's most important trading partner and one of the largest partners in development cooperation," EU Council president Herman Van Rompuy said after the summit, attended by Pakistan Prime Minister Yousuf Raza Gilani.

Rompuy noted that there were over one million people of Pakistani origin in the EU. "This is more than the total population of some of our member-states."

Gilani said: "We also agreed to enhance our cooperation in energy, security, nuclear non-proliferation, stability, environment and trade and economic cooperation. We are convinced that strengthening our institutional capacity will promote regional integration and build a more peaceful and prosperous South Asia."

Pakistani Foreign Minister Shah Mahmood Qureshi and EU foreign policy chief Catherine Ashton will co-host the next ministerial meeting of the Friends of Democratic Pakistan here Oct 14-15.