By Rosemarie Francisco and Stuart Grudgings

MANILA/KUALA LUMPUR | Sun Oct 7, 2012 10:44am EDT

(Reuters) – The Philippine government and Muslim rebels agreed on a deal to end a 40-year conflict that has killed more than 120,000 people, President Benigno Aquino said on Sunday, paving the way for a political and economic revival of the country’s troubled south.

The agreement begins a roadmap to create a new autonomous region in the south of the mainly Roman Catholic country before the end of Aquino’s term in 2016, giving the Muslim-dominated area greater political powers and more control over resources.

Expectations are high that after nearly 15 years of violence-interrupted talks, both the government and the country’s largest Muslim rebel group will keep their pledges in the agreement, to be signed on October 15 in Manila and witnessed by Aquino and Malaysian Prime Minister Najib Razak.

“This framework agreement is about rising above our prejudices. It is about casting aside the distrust and myopia that has the plagued efforts of the past,” Aquino said via a live broadcast from the presidential palace.

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