US President Barack Obama and his Cuban counterpart Raul Castro had a historic handshake on Friday as they arrived at the Summit of the Americas, which is taking place in Panama City.

Their gesture has been another important step in the thaw of relations between the two countries, which have been at odds in the past five decades.

The handshake happened as the two leaders arrived for the opening ceremonies of the summit, mostly away from the attention of the media, USA Today reports.

According to media reports, the two leaders also exchanged a short conversation, while they are expected to meet for more considerable talks on Saturday.

Their handshake was preceeded by a recent telephone conversations, which the two leaders had.

The two countries have been improving their relations since December 2014, when the first conversation between US and Cuban leaders in more than half a century took place.

The historic handshake was preceded by another significant event, as US State Secretary John Kerry and Cuban Foreign Minister Bruno Rodriguez had a discussion on Thursday evening.

These developments come as Obama recently announced that he will soon decide whether to remove Cuba from the list of state sponsors of terrorism, which could be followed by reopening of embassies in both countries.