U.N. peacekeepers destroyed a Serb bunker near Maglaj with cannon rounds following a seven-hour exchange of fire, in one of the most serious confrontations between U.N. forces and Serbs in Bosnia's two-year war, officials said Saturday.

In Sarajevo, meanwhile, the commanders of the Muslim-led Bosnian army and the Bosnian Croat militia signed an agreement Saturday to form an interim joint command until a new federal army could be created.The military merger is part of the U.S.-brokered accord joining Bosnia's Muslims and Croats in a federation.

A constitutional assembly was to open in the Bosnian capital Monday to set up a transitional government for the federation until new elections are held.

The U.N.-Bosnian Serb confrontation began shortly before noon Friday, when Bosnian Serbs opened fire with small arms on British peacekeepers near a U.N. observation post.

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The two sides exchanged small-arms fire intermittently over more than seven hours, until a British Warrior armored troop carrier opened fire with a 30 mm cannon. The Serb bunker took three direct hits and was destroyed.

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