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SERB-LED FORCES CLASH WITH SLAVS TO MAKE MOCKERY OF CEASE-FIRE

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Residents of Sarajevo rushed to cellars early Tuesday as Serb-led forces clashed with Muslim Slavs, making a mockery of yet another cease-fire in Bosnia-Herzegovina.

Serbia, despite the defiance of its president, began to feel the pinch of U.N. sanctions imposed last week over its involvement in the war in neighboring Bosnia. It said it was halting foreign debt payments.Artillery shells rained on Sarajevo overnight and Tuesday from Serb positions overlooking the Bosnian capital. Muslims and Serbs fought on the city's west side.

Serbian guerrillas attacked a U.N.-escorted convoy Tuesday that was carrying food and medical supplies to tens of thousands of residents of a Sarajevo apartment block complex besieged for more than a month, a U.N. spokesman and witnesses said.

A local aid worker was killed and a second was wounded, said Adnan Abdul Razak, said Adnan Abdul Razak, the spokesman for the U.N. Protection Force (UNPROFOR) headquarters in the embattled capital.

Dusko Tomic, an official of the Children's Embassy, the private relief group that organized the convoy, said Col. John Wilson, the chief of the U.N. mission, tried to rescue the pair, but his armored vehicle was fired on and forced to retreat.

A U.N.-sponsored cease-fire in Sarajevo, one in a long series ignored in newly independent Bosnia, was to have begun late Monday afternoon.

Fighting also was reported Tuesday around the medieval Croatian port of Dubrovnik, where Croat and Serb artillery traded fire across the nearby Bosnian border.

Bosnia's Muslim-dominated government said two Yugoslav warplanes attacked the area around the central Bosnian town of Tuzla on Monday. It gave no details.

Since Bosnia's majority Muslims and Croats voted overwhelmingly for independence on Feb. 29, more than 2,200 people have been killed in fighting between them and Serb irregulars backed by the Serb-dominated Yugoslav army.

The United Nations and most of the world blame Serbia and its small ally, Montenegro, for the war.

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(Additional information)

Serbia sold gold?

Serbia may have sold off a large portion of Yugoslavia's gold reserves valued at about $650 million earlier this year to fund the civil war in the Balkans, gold market sources said Tuesday.

International Monetary Fund financial statistics showed that Yugoslavian gold reserves stood at 1.92 million ounces or 59 tons at the end of January but have been near this level since the early 1980s.

"The IMF data isn't credible now. The Serbians have been sitting on Yugoslavia's gold while their economy collapses. I can't believe they haven't touched it," one senior dealer said.

In March this year, the London bullion market was awash with rumors of gold sales by an East European central bank as gold prices plunged from $350 to below $340 an ounce.

But five East European banks contacted by Reuters at the time denied that they had been involved in the sales.