"People did double takes," an eyewitness tells Us Weekly of the pair, who talked, smiled and giggled endlessly.

"It was cute, like they were just beginning dating."

Three days later, it was more of the same as the new couple got touchy while having drinks on the patio of NYC's Bowery Hotel.

Those close to the duo, who met through mutual pals and have known each other for a while, aren't surprised by the pair's PDA; in fact, they wonder what took so long.

"She has always said she was a fan of his music," a Diaz insider tells Us, "and he thinks she's beautiful and really smart."

And the pal adds, "They are both so funny and have a dark sense of humor. It is a natural fit."