Serbia, Kosovo talks fail to reach deal

European Union foreign policy chief Catherine Ashton listens during a news conference in Almaty February 27, 2013.

BRUSSELS (Reuters) - Serbia and Kosovo failed to reach an agreement on Wednesday to end the ethnic partition of the former Serbian province, but European Union foreign policy chief Catherine Ashton said she hoped a new round of talks next month would seal a deal.

Ashton said after hosting lengthy talks in Brussels between Serbian Prime Minister Ivica Dacic and Kosovo Prime Minister Hashim Thaci that the talks would resume on April 2.

"We will, I hope, reach conclusions on April 2," she said at a late-night news conference.

Serbian President Tomislav Nikolic said last week the two sides were "never closer" to settling their differences after several rounds of EU-mediated talks.

The clock is now ticking towards a mid-April progress report by Ashton that will decide whether the EU launches membership talks with Serbia, a major milestone in the country's recovery from Yugoslavia's bloody collapse and a vital signal of stability to much-needed investors.

Majority-Albanian Kosovo declared independence from Serbia in 2008, almost a decade after NATO bombs wrested control of the territory from late Serb strongman Slobodan Milosevic to halt a brutal counter-insurgency war.

But Belgrade retained de facto control over a small Serb pocket of northern Kosovo, and says it will never recognize its former southern province as a sovereign state.

The status of the Serb north, where Kosovo's government has very little presence, is at the heart of EU-mediated negotiations aimed at "normalizing ties" between the two.

Progress on the issue will decide whether the EU opens accession talks with Serbia in June, a process that would drive reform and potentially lure investors to the biggest economy in the former Yugoslavia.

Dacic said progress had been made in the latest round of talks but there were still differences.

Thaci said he could not confirm whether the two sides were close to or far from a solution, "but we are at least in the right direction."

(Reporting by Adrian Croft; Editing by Peter Cooney)