U.S. Secretary of State Hillary Clinton began a trip to the South Caucasus region on Monday calling on arch rivals Armenia and Azerbaijan to renounce violence that she warned could slip into a broader regional conflict.

Washington - The United States will suspend sanctions barring American investment in Myanmar in response to political reforms, but will retain the laws to ensure against backsliding, Secretary of State Hillary Clinton said on Thursday.

“Today we say to American business: invest in Burma and do it responsibly,” Clinton said during an appearance with Myanmar Foreign Minister Wunna Maung Lwin, who was on a first official US visit in decades as ties between the two countries warm rapidly.

Clinton said the United States would issue a general license to permit US investments across Myanmar's economy, and that US energy, mining and financial services companies were all free now to look for opportunities in the Southeast Asian nation formerly known as Burma.

But Clinton stressed that the laws underpinning US sanctions on Myanmar would remain as Washington seeks to keep its leverage and push the reclusive country's government further on democratic reforms.

“We are suspending sanctions. We believe that is the appropriate step for us to take today,” Clinton said.

“We will be keeping the relevant laws on the books as an insurance policy, but our goal and our commitment is to move as rapidly as we can to expand business and investment opportunities.”

Clinton said the United States would maintain its arms embargo on Myanmar, and urged the country's new civilian-led government to take further steps to exert its control over the military, which ruled the country for decades.

Thursday's announcement marked the latest step in a rapid rapprochement between the United States and Myanmar, where a dramatic series of reforms have seen where Nobel Peace Prize laureate and pro-democracy icon Aung San Suu Kyi take a seat in parliament.

In response, United States has promised to begin unwinding the complex web of US sanctions that have contributed to the country's isolation and driven it closer to its powerful neighbour, China.

Clinton said that Derek Mitchell, the State Department's co-ordinator for Burma policy, would be nominated to return to the country as US ambassador and Maung Lwin said his government had appointed its current permanent representative to the United Nations to fill the slot in Washington.

Pro-democracy advocates have urged the United States to move cautiously, saying sanctions are an important tool to maintain pressure on Myanmar's government to follow through on pledges of greater democratic openness.

Clinton stressed that US investments in Myanmar would be subject to the highest standards of corporate responsibility, and said Washington would be alert to ensure that those who abuse human rights or engage in corruption do not benefit from the economic opening between the two countries.

Maung Lwin, asked when the country's remaining political prisoners would be freed, said the government would grant further amnesty as appropriate. - Reuters