(Adds comments from negotiators) By Manny Mogato MANILA, Nov 15 (Reuters) - The Philippines and the country's largest Islamic rebel group have overcome a major hurdle in talks on a proposed ancestral Muslim homeland by agreeing on the area's boundaries, officials said on Thursday. The government and the Moro Islamic Liberation Front (MILF) have been talking on and off for a decade about a self-governed territory for Muslims in the south of the largely Catholic country to end a brutal, 40-year-old conflict. An ancestral domain agreement would provide an easier passage for both sides to reach a final pact to end the conflict, possibly by August 2008, officials involved in peace negotiations said. Disagreements over the size and wealth of the proposed territory had delayed the talks for over a year and was a major stumbling block to an eventual permanent peace deal. Thursday's talks in Kuala Lumpur removed that hurdle although others remained. Othman Abdul Razak, the chief Malaysian government facilitator for the peace talks, said both sides would hold another round of talks next month to draft the agreement on ancestral domain before its formal signing, expected in January. "It is one significant breakthrough we have achieved here," Rodolfo Garcia, the Philippine government's chief peace negotiator, told reporters at the end of the talks. "We are very confident that the signing of the ancestral domain agreement would be able to carry us forward in the other tasks and challenges that lie ahead." Manila and the MILF have already signed two agreements on security and rehabilitation of conflict-affected areas, where a sometimes uneasy truce has held since July 2003. Under the agreement reached on Thursday, a proposed Bangsamoro Juridical Entity would cover land and maritime territory up to the 15-km (9.5-mile) municipal water limits, and all the maritime resources within that area would be shared. After the ancestral domain agreement, both sides would move on to discuss what sort of government the homeland is to have. That question is one of the most vexing as political clans with large private armies in the south would be likely to use force to prevent any loss of influence in one of the country's most resource-rich areas. "The peace process is back on track, and we hope to be able to have something substantive on the final agreement by August next year," Othman said. Muslims in the south of the Philippines have been fighting for their own territory for decades. The conflict has killed more than 120,000 people and displaced at least 2 million since the late 1960s. Malaysia has been hosting the peace talks and officials said the Malaysians had agreed to extend the peacekeeping duties of a 60-member team composed of soldiers, police and diplomats from Malaysia, Brunei, Libya and Japan until August 2008. (Additional reporting by Syed Azman in Kuala Lumpur; editing by Roger Crabb)
