HAVANA, Cuba (REUTERS/AFP) - US President Barack Obama and his Cuban counterpart Raul Castro met Monday in Havana's Palace of the Revolution for groundbreaking talks on ending the standoff between the two neighbours.

Mr Obama, seeing Mr Castro only for the third time in a formal setting, is the first US president to visit Cuba since 1928. In an unprecedented gesture of respect for Mr Obama and the historic moment, a military band played the American National Anthem, the Star-Spangled Banner as the two leaders stood side-by-side, Mr Obama with his hand on his heart.

Their meeting will mark the start of historic talks where the US leader will press his counterpart for economic and democratic reforms while hearing complaints about US sanctions.

Mr Obama arrived in Cuba on Sunday on a trip that comes 15 months after he and Castro agreed to end five decades of Cold War-era animosity and work to normalise relations. On the first full day of his visit, he went to the heart of Cuba's Communist system, laying a wreath in Revolution Square at the memorial to independence hero Jose Marti.

He moved on to the the nearby Palace of the Revolution, where Mr Castro and his predecessor, older brother Fidel Castro, have led Cuba's resistance to US pressure going back decades.

A US presidential visit to the inner sanctum of Cuban power would have been unthinkable before Mr Obama and Mr Raul Castro's rapprochement in December 2014.

Marti was a 19th century poet and writer whose activism was key to winning Cuba's freedom from Spain and whose legacy was later adopted by Mr Fidel Castro's revolutionaries as a symbol of anti-imperialism.

Although Mr Obama and MrCastro have met three times before, Monday's meeting was set to be the most substantial. Mr Obama and Mr Raul Castro have deep differences to discuss as they attempt to rebuild the bilateral relationship.

As Mr Castro and Mr Obama stood shoulder to shoulder before their talks, a military band played the Cuban anthem and then the US anthem. After the music, the two leaders walked past a military honour guard with fixed bayonets.

The formal ceremony contrasted with Obama's lower key arrival by Air Force One in Havana on Sunday. Mr Castro did not meet the plane and there were no military honors.

The US president is under pressure from critics at home to push Castro's government to allow dissent from political opponents and further open its Soviet-style command economy.

His aides have said Mr Obama will encourage more economic reforms and greater access to the Internet for Cubans.

Ahead of his talks with Mr Castro, Obama announced a deal that Google has reached with the island.

"One of the things that we'll be announcing here is that Google has a deal to start setting up more Wi-Fi and broadband access on the island," Mr Obama told ABC News in an interview that aired on Monday. He gave no other details, and representatives for Google could not be immediately reached.

His administration hopes changes might also come at a Communist Party congress next month but doubts any political opening will be forthcoming.

Still, Mr Obama has promised to talk about freedom of speech and assembly in Cuba.

"I will raise these issues directly with President Castro," he told the Cuban dissident group the Ladies in White in a March 10 letter.

Mr Castro has said Cuba will not waver from its 57-year-old revolution. Government officials say the United States needs to end its economic embargo and return the Guantanamo Bay naval base to Cuba before the two nations can enjoy normal relations.

Cuban police backed by hundreds of shouting pro-government demonstrators broke up a Ladies in White march on Sunday, detaining dozens of people just hours before Mr Obama landed.

Mr Obama has urged Congress to rescind the 54-year-old embargo but has been rejected by the Republican leadership. He now has both Democratic and Republican elected officials with him on his Cuba trip and hopes Congress may act after the Nov. 8 presidential election.

One Cuban yelled "Down with the embargo!" during Mr Obama's tour of Old Havana, and the president responded by raising his right hand.

Asked about the potential for US companies to lose out to other countries in the Cuban market, Mr Obama told ABC: "There's no doubt that we still have some work to do, and part of that is bringing an end to the embargo that is currently in place."

While it may not happen during his final year in office given the US presidential election, "it is inevitable", he added.

Thwarted by Congress on the embargo, Obama has instead used his executive authority to loosen restrictions on trade and travel with the Caribbean island.

Cuba has praised those measures but Mr Castro will likely use the meeting on Monday to press Obama to go further.

"We think the US government can take more steps to send clear and direct signals in this direction," Foreign Trade Minister Rodrigo Malmierca told reporters on Sunday.

Mr Obama and Mr Castro met for half an hour during a regional summit in Panama last April and they also had brief encounters in South Africa at Mr Nelson Mandela's funeral in 2013 and at the UN General Assembly last September.

Travelling with his family, Mr Obama was greeted by cheering crowds on the road from the airport and while on a walking tour of Old Havana on Sunday.

Besides meeting Mr Castro, he also plans to visit a state-owned micro brewery and attend a state dinner on Monday.

On Tuesday, he will deliver a speech on live Cuban television and attend an exhibition game between Major League Baseball's Tampa Bay Rays and Cuba's national team.