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U.S. ENVOYS SCURRY IN QUEST OF PEACE

U.S. diplomats, hoping shifting battlefield fortunes will improve chances for peace, shuttled between Serbia and Croatia on Friday to push an initiative that Croatia's president said could produce a deal within weeks.

But the main warring sides in Bosnia - the Muslim-led government and rebel Serbs - adopted a more stubborn attitude a day before the U.S. delegation was expected in Sarajevo, the Bosnian capital.Croatian troops, meanwhile, pressed an assault on rebel Serbs. Croatia claimed to have captured Drvar, a strategic town across the border in Bosnia, although the Serbs denied it, and 10,000 Croatian troops massed near Dubrovnik, a resort on Croatia's southern coast.

"The situation (in Dubrovnik) is extremely tense," said Chris Gunness, a U.N. spokesman in Zagreb. "We believe the offensive actions could be launched within days."

Croatian commanders have vowed to keep Serb gunners in the town of Trebinje, just across the border in Bosnia, from firing at the walled medieval city of Dubrovnik. As shells fall closer to the center of town, carpenters have boarded up 15th-century statues.

U.S. Assistant Secretary of State Richard Holbrooke refused to comment on the peace proposal. He held talks Friday with both Serbian President Slobodan Milosevic, the regional powerbroker, and Croatian President Franjo Tudjman. Holbrooke was to continue to the Bosnian capital, Sarajevo, to meet with government leaders on Saturday.

Media reports have said the plan involves a land swap in which the Bosnian government would give up the eastern Gorazde enclave and land around a Serb-held corridor in the north in exchange for territory around Sarajevo.

But Bosnian Premier Haris Silajdzic said Friday that Holbrooke had assured him the plan did not include such a land swap.

The plan also would reportedly lift economic sanctions against Serb-led Yugoslavia and provide international aid to rebuild Bosnia. If either side refuses to participate, the plan would allow arms sales to its enemies.

Tudjman told a news conference in Zagreb the U.S. proposal was aimed at creating "a new stable international order in southeast Europe. We would like these ini-ti-a-tives to work out, and in a few weeks' time to have a peaceful solution," Tudjman said.