MOGADISHU (Reuters) - Somalia's president will visit Ethiopia on Saturday, his office said, the strongest sign yet of improving relations between the two neighbours after a year of tensions over Addis Ababa's plans to build a naval base in a breakaway Somali region.

Somali President Hassan Sheikh Mohamud arrived in Ethiopia’s capital on Saturday, exactly a month to the day since the two countries’ leaders reached an agreement aimed at ending a bitter, yearlong dispute. Ethiopian Prime Minister Abiy Ahmed said he received Mohamud at the Addis Ababa airport.

Somalia and Ethiopia are set to restore full diplomatic relations after a visit by Somalia's President Hassan Sheikh Mohamud to Addis Ababa, as efforts intensify to heal a year-long rift that threatened further instability in the Horn of Africa.

The two countries are looking to build on a recent peace deal that aims to defuse mounting tension in the Horn of Africa.

Prime Minister Abiy Ahmed, in the early hours of this afternoon, has welcomed Somalia’s President Hassan Sheikh Mohamud.   “I warmly welcome President Hassan Sheikh Mohamud, President of the Federal Republic of Somalia,

Ethiopia and Somalia renewed their diplomatic relations during a visit of Somali President Hassan Sheik Mohamud on Saturday to Addis Ababa. Mohamud and Ethiopia's Prime Minister Abiy Ahmed "agreed to restore and enhance their bilateral relations through full diplomatic representation in their respective capitals.

The rift began when Ethiopia signed a controversial agreement with Somaliland, Somalia’s breakaway region, reportedly offering to recognise its independence in exchange for a Red Sea port and a milita