U.S. President Barack Obama and Cuban President Raul Castro have talked

(Reuters) - U.S. President Barack Obama and Cuban President Raul Castro have talked by telephone about restoring diplomatic ties and are due to meet at a summit this weekend as they seek to set aside decades of hostility between two Cold War enemies.

The historic rapprochement is set to dominate the Summit of the Americas meeting in Panama, less than four months after a landmark announcement by Obama and Castro that they would seek to improve relations and boost trade and travel.

The leaders spoke by phone on Wednesday before Obama left Washington, discussing the process of resuming formal diplomatic relations and opening embassies, the White House said.

They have separate agendas for most of the day but will both attend the start of the two-day summit along with other regional leaders on Friday evening.

The pair are expected to meet on Saturday, said Ben Rhodes, Obama's deputy national security adviser. "We certainly do anticipate that they will have the opportunity to see each other at the summit tomorrow, to have a discussion."

Apart from a couple of brief, informal encounters, the leaders of the United States and Cuba have not had any significant meetings since Castro's older brother, Fidel Castro, toppled U.S.-backed dictator Fulgencio Batista in a 1959 revolution that soon steered the Caribbean island into a close alliance with the Soviet Union.

U.S. Secretary of State John Kerry and Cuban Foreign Minister Bruno Rodriguez held talks at a Panama City hotel on Thursday night, the first meeting between the two countries' top diplomats since the United States' John Foster Dulles and Cuba's Gonzalo Guell got together in Washington in 1958.

Sitting face-to-face in a room visible through a large glass window, Kerry and Rodriguez talked for over two hours. A senior U.S. State Department official described it as a "lengthy and very constructive discussion" and said they made progress.

"I can say with all sincerity that the essence of my policy is to do whatever I can to make sure that the people of Cuba are able to prosper and live in freedom and security, and enjoy a connection with the world where their incredible talents and ingenuity and hard work can thrive." —President Obama with Cuban President Raúl Castro in the first sit-down meeting between U.S. and Cuban leaders in more than 50 years