ROME, Wednesday

US President Barack Obama and Libyan leader Muammar Gaddafi could meet in July at a Group of Eight summit in Sardinia where, according to diplomats from the host country Italy, Gaddafi will represent the African Union.

If Obama and Gaddafi's presence were confirmed at the part of the summit that is due to include African leaders, it would be the first meeting between Gaddafi and a US president.

But it was unclear how keen the United States and other G8 members are on Gaddafi's presence. Some G8 diplomats said they were unaware a final list of participants had been discussed.

US-Libyan ties, strained for many years over Libyan support for groups Washington considers terrorist, have thawed enough for a U.S. embassy to open. The then US Secretary of State Condoleezza Rice visited Gaddafi last year and former president George W. Bush spoke to him on the telephone.

But there is still mistrust on both sides and relations are business-like at best.

Sandro de Bernardin, political director at Italy's foreign ministry, said it had become traditional for G8 summits to have "outreach" meetings with developing economies as well as talks on issues like development with African leaders.

With Gaddafi elected to the rotating chairmanship of the African Union earlier this month in Addis Ababa, he should represent the organisation at the July 8-19 G8 summit.

As the first African-American to be elected US president, it might be awkward for Obama to avoid attending the session of the Sardinia summit dedicated to Africa.

"The rotating presidency of the African Union is always invited and now Gaddafi has been elected president of the African Union so he will take part in the traditional session which is called "Outreach on Africa"," said De Bernardin.

"It did not depend on us," the diplomat told Reuters.

A US diplomat in Tripoli said he did not know whether Obama and Gaddafi would meet in Sardinia.

US-Libyan ties have improved dramatically since Libya abandoned in 2003 the pursuit of weapons of mass destruction.

Last year it paid into a fund to settle claims by families of Americans killed in the 1988 bombing of a Pan Am flight over Lockerbie, Scotland, and the first US ambassador to Libya in 36 years took up his post last December.

While Obama was still a candidate, last June, Gaddafi said he would have an "inferiority complex" because he is black and if elected US president might "behave worse than whites". But he later called Obama's victory a "victory for black people".

Gaddafi, who seized power in a 1969 coup, has met some European leaders since the thaw began, including Britain's Tony Blair in 2007 and Italy's Silvio Berlusconi last year, and has visited some European countries, though not so far Italy.

His energy-rich country has favoured mostly European and Asian companies for multi-billion-dollar infrastructure deals. (Reuters)