Serbia's ex-president Boris Tadic shook hands with former foe Prime Minister Hashim Thaci of Kosovo on Saturday, for the first time since 2008, after a U.S. envoy urged Belgrade to resume practical dialogue with its former province.
The European Union made Serbia an official candidate for membership in March, but its further progress largely hinges on its relations with Kosovo.
Belgrade officials have so far stayed away from any meeting where Kosovo was taking part because they do not recognise Kosovo's independence, declared in 2008.
Tadic, who lost a presidential runoff vote to nationalist Tomislav Nikolic in May, made a surprise visit to the southern Adriatic city of Dubrovnik on Saturday for a diplomatic summit.
His Democratic Party is formally still in power until Nikolic's coalition with the Socialist Party is confirmed in parliament, probably in mid-July.
Media speculated Tadic had come to meet Thaci, for their first face-to-face contact since Kosovo became independent. In the end, they only shook hands and exchanged a few words at the closing ceremony, but diplomats took it as a small sign of progress.
"It could actually take some edge off future Serbia-Kosovo meetings," an EU diplomat told Reuters.
U.S. Assistant Secretary of State Philip Gordon, who will travel to Belgrade and Pristina next week, urged Serbia to be more realistic in its dealings with Kosovo.
"Neither we nor the EU expect Serbia to recognise Kosovo at this point, it won't do that," Gordon told the summit.
"However, Serbia will have to come to terms with the reality of a democratic, sovereign, independent and multi-ethnic Kosovo within its current borders... Partition is not an option," he said, while reiterating Washington's support for Serbia and Kosovo's wish to join the European Union.
Western powers, including Washington, agreed this week to stop overseeing Kosovo in September, four years after it gained independence, but NATO troops and EU police will remain in Kosovo, where ethnic clashes still break out occasionally.
In one such incident, Kosovo police reported on Saturday that a Serb couple had been found shot dead at their home in the southern Kosovo village of Talinoc, which is surrounded by ethnic Albanian communities.
Local media said the husband, Milovan Jevtic, was a community leader helping other Serbs who had fled during ethnic conflict in the late 1990s to return to the village, a programme supported by the Kosovo government and international donors.
Gordon joined the European Union in calling for Serbia to stop supporting illegal police and judicial structures set up by ethnic Serbs in northern Kosovo.
Around 50,000-60,000 Serbs in a tiny northern part of Kosovo bordering Serbia reject Kosovo's independence and oppose the Pristina government, challenging NATO and EU troops.
Last Thursday, more than 50 people were injured when Kosovo police clashed with a group of visiting Serbs at the border.
"Belgrade must end its support for the illegal parallel security and judicial structures in northern Kosovo and ensure freedom of movement for all," Gordon said.