Obama, Castro hold historic meeting

US President Barack Obama and Cuba's Raul Castro have held unprecedented face-to-face talks in Panama in a historic effort to bury Cold War-era antagonism.

In the first sit down between leaders of both nations since 1956, Obama thanked Castro for his "spirit of openness and courtesy" during their interactions, while the communist leader stressed that the negotiations will require patience.

The Obama-Castro meeting was the climax of their surprise announcement on December 17 that, after 18 months of secret negotiations, they would seek to normalise relations between their two nations.

"This is obviously a historic meeting," said Obama, who spoke first after their talks on the sidelines of the 35-nation Summit of the Americas.

Obama declared that, after 50 years of US policies that had not worked, "it was time for us to try something new", adding that the immediate task was to reopen embassies that shuttered after the 1961 diplomatic break.

Castro cracked a smile when Obama acknowledged that the two sides will continue to have differences on human rights and other issues.

After Obama spoke, the two men stood up and shook hands.

Saying he agreed with everything Obama stated, Castro said the two government can still have differences but "with respect of the ideas of the others".

Obama told reporters the conversation was "candid and fruitful" and that he did not shy away from telling Castro that Washington would keep airing concerns about democracy and human rights.

Earlier Obama told the summit the "shift in US policy represents a turning point for our entire region".

Castro mentioned his desire to see the end of the US embargo, which forbids most trade and American tourism to the island. Obama has urged the US Congress to end it.

Addressing a key Cuban demand, Obama told Castro that he would decide whether to recommend removing Cuba from a US list of state sponsors of terrorism in the "coming days".