NICOSIA: Peace is within reach in Cyprus, US Secretary of State John Kerry said on Thursday as he watched children from both sides of the divided island play basketball together.

Kerry is the latest foreign official to voice optimism that a deal may finally be at hand to reunite the east Mediterranean island, divided since 1974.

Popular Greek and Turkish Cypriot leaders want a settlement, Greece and Turkey have other problems, and the discovery of offshore gas could cushion the cost.

"In recent months, it has become clear that the ground really is shifting and tangible progress is being made," Kerry said after separate meetings with Greek Cypriot leader Nicos Anastasiades and Turkish Cypriot leader Mustafa Akinci. The three planned to dine together afterwards.

"I am more convinced than ever that a resolution to the long-standing division of Cyprus is within reach," Kerry added.

Earlier, he sank a basket himself and signed basketballs for the players.

The island's Greek and Turkish communities have lived apart since Turkey invaded the north in 1974 after a brief Greek-inspired coup aimed at uniting Cyprus with Greece.

One of the world's oldest peacekeeping forces monitors a 180 km (110 mile) ceasefire line that slices across the island and bisects the capital, Nicosia.

The breakaway state in the north is recognised only by Turkey and Cyprus's partition is an obstacle to Turkey's ambition to join the European Union.

Cyprus joined the EU in 2004 but an attempt to use its accession as a lever for reunification failed when Greek Cypriots rejected a UN peace plan in a referendum.

"A united Cyprus will stand as a beacon of hope in a tumultuous part of the world," Kerry said, alluding to Syria's civil war that has sent millions of refugees streaming into Jordan, Turkey and Lebanon and now into Europe.