JUST IN: The silence ends. PM Narendra Modi and Pakistan PM Nawaz Sharif exchange pleasantries at the SAARC retreat in Nepal.

"Yes, they have met and shook hands at the retreat,' Nepal Foreign Minister Mahendra Bahadur Pandey told IANS over phone from Dhulikhel, where the retreat is being held on the second day of the two-day Saarc Summit.

Both the prime ministers have taken a tour in and around the resort which is famous for a stunning view of the Himalayas.

The leaders will spend almost five hours at the retreat.

Yesterday, they shared the dais but other than a formal handshake, there was no exchange of courtesies between the prime ministers of India and Pakistan during the nearly three-hour South Asian Association for Regional Cooperation summit in Kathmandu on Wednesday. Prime Minister Narendra Modi and his Pakistani counterpart Nawaz Sharif, who were sitting two seats away from each other, did not look at each other even when Sharif went across both before and after delivering his speech at the 18th meeting of the eight-member regional bloc.

The leaders of Maldives and Nepal were seated between Modi and Sharif.

Pic: SAARC leaders pose at Dhulikhel, a retreat near Kathmandu, where they will spend five hours.