NEW DELHI/BEIJING Oct 25 (Reuters) -

India and China have begun implementing an agreement to end

a military standoff on their disputed Himalayan border, the two

sides said on Friday, in the biggest thaw between the Asian

giants since deadly clashes between their armies four years ago.

Troops who were eyeball-to-eyeball at two points on the

frontier in the western Himalayas had begun pulling back, an

Indian government source said, heralding an end to a the

standoff.

The nuclear-armed neighbours struck a deal earlier this week

on patrolling the frontier, which then paved the way for the

first formal talks in five years between President Xi Jinping

and Prime Minister Narendra Modi on the sidelines of a regional

summit in Russia.

"According to the recently agreed solution between India and

China ... their frontline armies are implementing relevant work,

with smooth progress so far," Lin Jian, a spokesperson for

China's foreign ministry, said on Friday.

In New Delhi, a government official aware of the details

said troops on both sides had started withdrawing from the areas

of Depsang and Demchok, the last remaining points where they had

stood face-to-face.

The source spoke on condition of anonymity as he was not

authorised to speak to the media on the issue.

India's foreign ministry did not immediately respond to

a Reuters request for comment.

Neither side has provided details of the new pact, which

is expected to help improve political and business ties damaged

by a deadly military clash in 2020, when 20 Indian and four

Chinese troops died in clashes in the Galwan Valley.

The two sides had earlier pulled back troops from five

other face-off points, but the last withdrawal of troops took

place over two years ago.

CAUTIOUS BUSINESS EASING

On Wednesday, Xi and Modi agreed to boost communication

and co-operation in a bid to help resolve conflict.

But officials in India said that New Delhi would still

be cautious and is ready to only take baby steps towards

building economic ties with Beijing, given the trust deficit of

the last four years.

India had blocked direct flights with China, banned

hundreds of Chinese mobile applications, and added layers of

vetting on Chinese investments, virtually blocking all major

proposals from the likes of BYD and Great Wall Motors.

Two Indian government sources said that India would now

consider opening up the skies and fast tracking visa approvals

to complement the recent easing of tensions, but New Delhi is

not yet ready to reverse all the steps it took against Beijing

any time soon.

The Asian giants went to war in 1962 over their undemarcated

border, which has been a constant irritant in ties.