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CROATIA TIGHTENS NOOSE ON SERBS

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Bosnian Serbs in Banja Luka faced a new threat from the north Tuesday after a cross-border incursion of the Croatian army toward the rebel stronghold.

Croatia's army, which has played a key role in the fighting in western Bosnia, moved south across the border overnight, taking the towns of Bosanska Kostajnica and Bosanska Dubica, the Slobodna Dalmacia newspaper said.At the same time, Bosnian army troops in the northwestern Bihac region moved east to retake Bosanski Novi, the newspaper said. They claimed to have taken Sanski Most, 25 miles west of Banja Luka, but Serbs appeared to be holding the town Tuesday.

U.N. spokesman Chris Gunness confirmed a cross-border Croatian attack but said it was not clear how far the Croatian soldiers advanced. The United Nations has no presence on the ground in the region.

Bosnian Serbs say they foiled the Croatian army incursion, Yugoslavia's Tanjug news agency said. But in Zagreb, Croatia, U.N. spokesman Alexander Ivanko said they had reports of Bosnian government artillery within 10 miles of Banja Luka.

"There is a threat, a serious threat" to the city, he said.

The Red Cross said 12,000 refugees were on the road between Banja Luka and Derventa to the northeast. Refugees also were crowding other Serb-held towns in the region - an estimated 30,000 in Prijedor alone, the Red Cross said.

The newest advance from Croatia means another front has opened against the rebel Serbs, who have already lost thousands of square miles in the region.

A Serb shell killed two Danish peacekeepers Monday in their camp at the Croatian border town of Dvor, and a senior Danish officer asserted Tuesday the shelling was deliberate. The Serbs said Croatian shelling killed seven of their civilians at refugee camps near the Bosnian border and wounded 22 others.

Gunness speculated that Croatia might be trying to set up a buffer zone on its southern border similar to one created on its southeastern boundary over the past few months.

Once that is accomplished, the Croatian army would have little incentive in continuing its advances. After meeting with President Franjo Tudjman of Croatia Tuesday, Foreign Secretary Malcolm Rifkind of Britain said he was told the Croats already had "stopped taking part in military operations."

Croat and government forces claim they have captured 2,400 square miles - or 12 percent of Bosnia - in the past week. Slobodna Dalmacia reported that 35,000 government and Croat troops were participating in the Banja Luka campaign.

With the Serbs determined to protect Banja Luka, 85 miles northeast of Sarajevo, the easy gains appeared to have been checked.

"The Bosnian Serb army are assessed to be putting up far stiffer resistance along the whole of the confrontation line," said Lt. Col. Chris Vernon, another U.N. spokesman, adding it appeared to have retaken some territory from government troops.

Two weeks of NATO bombing has crippled the Bosnian Serb communications and radar networks, going a long way toward leveling the playing field against the more numerous but poorer-equipped Bosnian army.

The airstrikes were halted for 72 hours on Thursday to allow the Serbs to comply with NATO and U.N. demands to withdraw their heavy guns around Sarajevo. The rebels complied in part, and on Sunday won another 72 hours to finish the job. U.N. officials reported no more weaponry removed on Monday but said the Serbs around Sarajevo appeared to be grouping guns for withdrawal Tuesday.

Involvement by the Croatian army is also making a difference on the battlefield: The army, which routed rebel Serbs in Croatia in just over three days last month, has become an efficient fighting force.