Zimbabwe President Robert Mugabe signed an agreement to hold power-sharing talks with his opposition on Monday, a diplomatic breakthrough following almost three months of political instability.

A grim-looking Mugabe and smiling opposition leader Morgan Tsvangirai signed the document in Harare, Zimbabwe's capital, at about 3 p.m. local time. The agreement maps out conditions for talks that will lead to a unity government between the longtime president and the popularly supported opposition leader.

It was the first time in more than a decade that the bitter foes have met face to face.

The signing is "a positive step forward in the ongoing dialogue" to resolve the political and economic crisis that has plagued Zimbabwe for months, said South African foreign affairs spokesman Ronnie Mamoepa.

South African president Thabo Mbeki presided over the signing. His country has led the African Union's effort to help Zimbabwe come to a peaceful resolution to the standoff, which began in March following highly contested elections.

Tsvangirai earned the most votes but pulled out of a widely contested June runoff vote following a rash of state-sponsored violence against his supporters

According to the opposition, post-election violence has left 120 people dead, thousands injured. They say rioting and property damage has put tens of thousands of Zimbabwe residents on the streets.

Some observers see a coalition government as the only way for the country to escape the political turmoil, which that has led to widespread economic collapse.

Monday's agreement is seen as an achievement for Mbeki, who has agreed to work with the AU and the United Nations in his role as mediator. He has been working with the two sides since July 10.

Mbeki has long insisted on dialogue instead of sanctions, while many countries around the world have insisted such measures are the best way to punish Mugabe and force him to negotiate.

The coalition government is expected to include Mugabe as president and Tsvangirai as vice-president or prime minister. Mugabe has stated he will only share power if he remains at the head of the government.

Mugabe's party insists he is the country's rightful leader, despite international insistence that the one-candidate presidential run-off vote on June 27 was a sham.

At a UN Security Council meeting earlier this month, Russia and China issued a rare double veto of a U.S.-led plan to impose sanctions on Mugabe and his aides.

The European Union is expected to pass a proposal on Tuesday that would prevent members of Mugabe's government from travelling to the EU. The measures, which are seen as a response to the Security Council's lack of action, would also take action against companies owned by allies of Zimbabwe's government.

With files from The Associated Press