TEHRAN, July 30: Turkey and Iran signed a security agreement here on Thursday pledging to jointly combat Turkish Kurd rebels and anti- Iranian fighters, but failed to resolve a series of bitter trade disputes.

After a scheduled signing ceremony covering several business deals was cancelled, officials from both sides put a brave face on what was evidently a disappointing conclusion to a landmark two-day visit by Turkish Prime Minister Recep Tayyip Erdogan.

"I think the security cooperation between the two countries is bearing fruit," Mr Erdogan told reporters, who had been pressing for Iran to put rebels from the former Kurdistan Workers' Party (PKK), now known as Kongra-Gel, on its list of terror groups.

Iran's deputy interior minister for security affairs, Ali Asghar Ahmadi, told AFP that Iran had agreed to do so, with Turkey in return doing the same for the Iraq-based People's Mujahedeen (MKO) - Iran's main armed opposition group.

Iran also has a Kurdish minority and shares Turkey's concerns over any moves toward greater autonomy by the Kurds in northern Iraq, but in recent years ties have been marred by mutual accusations that each side was sheltering each others' opposition.

"Both Iran and Turkey have decided to brand the PKK and MKO as terrorist groups, and what was signed today stated that even if they continue to operate under different names, they will continue to be dealt with as terrorist groups," he said.

"We both agreed to follow up other security issues," he added, but gave no further details.

Turkey and Iran have recently boosted cooperation on security matters, including against the ex-PKK, with Iranian security forces earlier this month launching a major crackdown on their militants hiding in Iranian territory along the border with Turkey.

But the mood was nevertheless gloomy on trade, with no immediate solution reached to a bitter dispute concerning a natural gas supply deal signed in 1996.

Turkey has halted imports, complaining of poor quality and asking Iran to reduce the price. "The matter of gas has been dealt with," Mr Erdogan said - but added Turkey and Iran's main gas companies still needed further discussions. -AFP