Kosovo's president insisted that its independence was an "irrefutable reality" as the impoverished territory on Sunday marked five years since it broke away from Serbia.

Relations have thawed with its longtime foe under EU-sponsored reconciliation talks that are key to Belgrade's bid to join the bloc, but tensions remain and daily life in Kosovo is still a struggle for many.

"The republic of Kosovo is an irrefutable reality and its independence is irreversible," president Atifete Jahjaga said in a televised statement.

But in a rare address made in Serbian during a solemn parliamentary session later on Sunday, she extended a hand of cooperation to the Serb community here.

"Kosovo's independence is your independence.... This is your homeland also that you will be proud off," Jahjaga said, addressing ethnic Serbs in the majority-Albanian region.

"Let's extend a hand of cooperation... for the sake of a peaceful future."

Kosovo's star-studded flags fluttered along Pristina's main streets alongside the US Stars and Stripes as thousands of people gathered to watch a military parade by the Kosovo Security Force, trained by NATO as an emergency force.

"We are developing a clear vision of our Euro-Atlantic future," Jahjaga said of Kosovo's desire to join both the EU and the North Atlantic Treaty Organisation.

Almost 100 countries -- including the United States -- have recognised Kosovo since ethnic Albanians proclaimed independence on February 17, 2008, almost a decade after the 1998-1999 conflict that ended with a NATO bombing campaign against late Serbian strongman Slobodan Milosevic's forces.

US Secretary of State John Kerry called on the authorities to keep "building stronger democratic institutions, advancing new economic opportunities, promoting the rule of law, and reinforcing Kosovo's European integration path".

Belgrade still considers the region its southern province, but the EU-led talks which began in March 2011 have led to a thaw, and the two presidents held their first talks in Brussels on February 6.

With Serbia's EU membership dependent on improving ties with Pristina, Prime Minister Ivica Dacic hinted last month Belgrade may give up its opposition to Kosovo's long-held goal of joining the United Nations.

But Dacic has said the "most difficult part of this dialogue is ahead of us" in order to reach agreement with Pristina on the integration of the Serb minority.

On Sunday, Dacic insisted that "one should not believe in an illusion" that Kosovo is truly independent or that it is still part of Serbia.

"We need solutions that would emerge from reality," Dacic said, adding that Kosovo could exist "for another 100 years without being recognised by the UN."

His Kosovo counterpart Hashim Thaci said Saturday that Pristina hoped the EU-sponsored talks -- which were upgraded to top-level negotiations in October -- would lead to the "independence of Kosovo being recognised soon" by Serbia.

Stumbling blocks remain, including Belgrade's hope for some autonomy for the 120,000 Serbs who refuse to recognise the ethnic Albanian authorities.

Kosovo foreign minister Enver Hoxhaj said he hoped the next round of talks starting on Tuesday in Brussels would open the door to elections that would help integrate ethnic Serbs and would eventually end parallel institutions in minority areas in the north of Kosovo, such as ethnic Serb police.

The political progress has been overshadowed by the daily struggles of Kosovans, who say the euphoria of independence has worn off as they deal with the realities of living in disputed territory in one of Europe's poorest regions.

More than a third of Kosovo's 1.8 million people live on less than a dollar a day and gross domestic product per capita is one of the lowest in Europe at 2,600 euros ($3,500) a year, according to the World Bank.

Pristina has struggled to tackle organised crime and corruption and unemployment stands at 40 percent.

"The past five years have not brought any progress or positive developments that would give a meaning to this day," 30-year-old-economist Isuf Olluri said.