* Asmara gives first response to Addis' peace gesture
* Eritrean President refers to "positive signals"
* Eritrean delegation to visit Ethiopia
* Cost of conflict weighing on both countries (Adds analyst, edits)
By Aaron Maasho
ADDIS ABABA, June 20 (Reuters) - Eritrean President Isaias Afwerki raised hopes of a breakthrough in one of Africa's most intractable military stand-offs on Wednesday by describing recent peace overtures from arch-enemy Ethiopia as "positive signals".
Speaking at a Martyrs' Day event in the capital, Asmara, the 72-year-old Isaias said he was sending a delegation to Addis Ababa to understand the position of Ethiopia's new prime minister, Abiy Ahmed, and "chart out a plan".
It was the first response from Eritrea, one of Africa's most closed and authoritarian states, to Abiy's surprising pledge this month to honour all the terms of a peace deal that ended a 1998-2000 war between the Horn of Africa neighbours .
Adding to the positive mood music, Abiy's chief of staff said the prime minister welcomed Isaias's statement and promised the Eritrean delegation would be welcomed "warmly and with considerable goodwill".
The border war nearly two decades ago drew comparisons to the First World War, with waves of soldiers forced to march through minefields towards Eritrean trenches, where they were cut down by machinegun fire. As many as 80,000 are believed to have been killed in total.
Disputes over the still-militarised frontier, in particular the town of Badme, have kept the two sides at loggerheads. Asmara had used the Ethiopian threat to justify hefty military spending and the long-term conscription that has caused hundreds of thousands of young men to flee, mostly to Europe.
However, Abiy, a 41-year-old ex-soldier who has outlined a series of radical reforms since taking over in March, stunned Ethiopians this month by saying he was prepared to honour international rulings that put Badme, which Ethiopia has refused to cede, in Eritrea.
"The positive signals issued in these past days can be seen as an expression of this popular choice. We can say that the positive messages which have been circulating of late are signs of the people's choice," he said, according to the official translation of his speech on state EriTV television.
"Outside myopic considerations of public relations stunts and advantages, we will send a delegation to Addis Ababa to gauge current developments directly and in depth as well as to chart out a plan for continuous future action."
There were no further details of the mission, including its date or remit, although Eritrea's ambassador to Japan, Estifanos Afeworki, described it on Twitter as "constructive engagement".
Analysts said the road to any settlement would be arduous and long but if both sides continued to see the benefits of peaceful co-existence - and the international community kept up the pressure - it was possible.
"Sending a delegation to open talks with the Ethiopians is a major development," said Martin Plaut, a Horn of Africa expert at London's Institute of Commonwealth Studies.
"It's the kind of breakthrough that could end the no-war, no-peace stalemate that has prevailed since the end of the disastrous border war in 2000."
Eritrea has no diplomatic relations with Ethiopia, although it has an embassy in Addis as part of its representation to the African Union, whose headquarters are in the Ethiopian capital.
In parliament this week, Abiy acknowledged that the tensions were inflicting a heavy economic cost on both countries and said Addis should no longer hide this price tag from the Ethiopian people, another stunning departure with the past.
Although welcomed across East Africa, Abiy's concession met opposition from war veterans still living in Badme and ethnic Tigrayans living in Tigray province, which lies along the Eritrean border.
Some Tigrayans, who have long been the leading ethnic group in the EPRDF coalition that has run the nation of 100 million for more than two decades, are concerned their interests will be hurt if Badme is surrendered.
Residents told Reuters a protest had already taken place in the Irob district in Tigray over the decision by Abiy, a member of the Oromo ethnic group, Ethiopia's largest.
After Abiy's Badme announcement, the Tigrayan People's Liberation Front, a regional political party that had dominated the EPRDF until Abiy took office in April, came out swinging against any concessions to Asmara.
"The Tigrayan People's Liberation Front will not take part in any process that harms the interests of the people of Tigray," it said in a statement, demanding that any withdrawal be linked to additional concessions from Eritrea. (Reporting by Larry King)(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)