By Paul Sandle and Sarah Mills

CARDIFF (Reuters) -British rock band Oasis reunited in Cardiff on Friday as the Gallagher brothers put more than 16 years of acrimony behind them to deliver a hit-packed set that took thousands of fans back to the optimism and swagger of the 1990s.

The Manchester band defined the "Britpop" revival of guitar music, before tensions between Noel Gallagher, the band's main songwriter, and his younger brother, lead singer Liam, led to its split.

The group walked onto the stage in the 74,500-capacity Principality Stadium and launched into "Hello," sounding as tight as at the height of their fame.

Interaction with the audience was minimal during the two-hour performance. Interaction between the brothers was nonexistent until a very brief hug at the end.

The crowd, largely comprising middle-aged fans revisiting their youth, sang along to hits including "Cigarettes & Alcohol", "Supersonic" and "Roll With It."

At the end of "Live Forever," a picture of Liverpool and Portugal footballer Diogo Jota, who was killed in a car accident on Thursday, was shown on the screens behind the band.

Oasis ended with "Don't Look Back in Anger," "Wonderwall" and "Champagne Supernova," all pulled from their second album, "(What's the Story) Morning Glory?", the biggest-selling record in Britain in the 1990s.

"Thank you for putting up with us over the years," Liam said.

Adam Williams, 42, from Wrexham, North Wales, last saw the band in 2008. "They were probably better than they were then," he said.

Oasis had announced the shows nearly a year ago, setting off a frenzy for tickets.

"The thing that makes the Oasis reunion special is the thing that makes any reunion special: It has to be something that people really want and something that people thought they'd never see. And Oasis ticks both those boxes," music journalist Mark Sutherland told Reuters.

Fans started to gather early outside the stadium, where official Adidas-Oasis football shirts were on sale for 85 pounds ($116).

"They're more than a band, it's almost like a movement," said Matt Hobman, 48. "It's like a piece of Britishness."

The Gallaghers were joined by original member Paul "Bonehead" Arthurs, as well as Gem Archer, Andy Bell and Joey Waronker on stage.

Many fans waited for hours in online queues to buy tickets last year, only to find prices had jumped when they eventually had a chance to get them.

Britain's competition watchdog launched an investigation into Ticketmaster over the sale, including the use of "dynamic pricing" to hike the cost to fans at the last minute.

"Are you having a good time?" Liam asked the crowd. "Was it worth the 40,000 pounds you paid for the ticket?"

Oasis play one more show in Cardiff, before the tour moves to the Gallaghers' home city of Manchester.

It continues in Britain and Ireland, followed by shows across North and South America, Asia and Australia.

($1 = 0.7330 pound)

(Reporting by Paul Sandle and Sarah Mills; Editing by Alex Richardson and Matthew Lewis)