TEHRAN, July 28: Turkish Prime Minister Recep Tayyip Erdogan was in Tehran on Wednesday for talks he hoped would boost cooperation in the fight against Kurdish rebels and smooth over a series of bitter business disputes.

The visit is a sign of growing political and economic ties between the two neighbours, whose relations had been beset by deep-rooted ideological differences. Mr Erdogan said he expected Iran would put Turkish Kurd rebels on its list of terrorist groups during the talks.

This would be a major breakthrough in ties, as both sides have in the past traded accusations of sheltering dissidents. "Tomorrow we will sign a memorandum of understanding on terrorism. We will sign the memorandum in a way which will include Kongra-gel/PKK as a terrorist organization," he told reporters here.

The former Kurdistan Workers' Party (PKK), now known as Kongra-Gel, has waged a 15-year separatist war in predominantly Kurdish southeastern Turkey. The group ended a five-year unilateral ceasefire with the government on June 1.

Turkey and Iran have recently boosted their cooperation on security matters, including against the PKK, and foreign ministry officials in Iran said the matter was due to be discussed in depth with the Turkish premier.

Iranian security forces this month launched a major crackdown on PKK militants hiding on Iranian territory along the border with Turkey, in which at least 10 rebels and two Iranian soldiers were reported killed.

Iran also has a Kurdish minority and shares Turkey's concerns that any moves toward greater autonomy by the Kurds in northern Iraq could spark unrest among their cousins in neighbouring countries.

"We saw that Iran shares the same views with Turkey on Iraq," said Mr Erdogan, who is on a two-day visit and accompanied by a high-level political and economic delegation including some 130 businessmen. -AFP