India has said that no meeting between the two is possible on the sidelines of the Kathmandu summit.
Pakistan and India, both nuclear powers, have massed troops on their borders and traded fire in recent days, after a suicide attack on India's Parliament that killed 14, including five attackers, Dec. 13. India blames the attack on extremists based in Pakistan.
Pakistan's military leader said his country would never initiate a war. "Pakistan stands for peace. We do not want war," Musharraf told guests at the dinner. "We will never initiate a war unless it is thrust . . . upon us."
President Bush said the United States was working actively to bring calm to India and Pakistan.
"The Americans are helping to reduce the tensions," Musharraf said. He added that his army remained focused on patrolling the porous western border with Afghanistan, where several battalions have been deployed, and that the numbers had not been drawn down to meet the Indian threat.
Indian outrage at the bloody attack at the heart of its power in the center of the capital has triggered the biggest military buildup in 15 years and an increasingly bitter war of words.
New Delhi is demanding that Pakistan act against the anti-Indian militants fighting for the independence of the disputed Himalayan region of Kashmir.
It is angry at what it says is Pakistan's failure to arrest the leaders of Jaish-e-Mohammad and another Pakistan-based guerrilla group, Lashkar-e-Tayyaba, which it blames for the Parliament attack.
Asked whether he was prepared to act against extremist pro-Kashmiri militant groups, Pakistan's Musharraf said: "We understand our responsibility. We know what we have to do."
On Tuesday, Pakistan detained Maulana Azhar Masood, leader of the Jaish-e-Mohammad guerrilla group fighting India's rule in Kashmir, its only Muslim majority state.
