Peace talks on Bosnia-Herzegovina resumed Tuesday with signs the warring sides could be edging toward agreement on the key issue of the republic's territorial division.

Meeting in Geneva were leaders of Bosnia's three sides: the Muslim-led government and ethnic Serbs and Croats. Also attending were the presidents of Serbia and its allies, Montenegro and Croatia. The leaders are to meet Wednesday with European Community foreign ministers in Brussels, Belgium.The previous round of negotations collapsed Dec. 2, with Muslims demanding one-third of Bosnia, twice what they now control, as well as access to the Adriatic Sea on the Croatian-controlled coast.

But European Community mediator Lord Owen indicated that after a weeklong round of "private diplomacy," Serbs and Croats are now prepared to make concessions to the Muslim side.

"There are things that are new," he told reporters at the United Nations building in Geneva, where the talks are being held.

"There has been a lot of movement toward 331/3 percent," he said. "I am fairly confident that can be reached."

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Bosnian Serb leader Radovan Karadzic also voiced optimism.

"This time I think we can make it if the EC and Croats are sensible and serious," Karadzic said. If so, "We can make a final political settlement."

However, Bosnia's President Alija Izetbegovic, speaking Monday when he arrived for the talks, said he was not optimistic. "I don't see any change," he said.

Presidents Franjo Tudjman of Croatia and Slobodan Milosevic of Serbia met early Tuesday to try to unblock the talks.

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