Blast rocks Serbian bank in Kosovo

The explosion targets the only Serbian bank allowed to operate in Kosovo by the United Nations mission in the province.

A powerful blast rocked the offices of a Serbian bank in southern Kosovo, officials said. No one was injured.

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The explosion took place late on Tuesday in the ethnically mixed town of Dragas, in the mountainous region bordering Macedonia, and targeted the only Serbian bank allowed to operate in Kosovo by the United Nations mission that runs the province, said police spokesman Veton Elshani.

Police said the blast ripped through the bank's offices, shattering windows and causing considerable damage to the building's structure.

The area where the explosion happened is inhabited by a Serbian-speaking Muslim community that shuns Kosovo's authorities and mostly follows instructions from Belgrade.

The bank has offices in areas where the Serb minority lives, surrounded by the ethnic Albanian majority and handles funds from Serbia earmarked for the minority in Kosovo.

On Monday, UN Secretary General Ban Ki-moon had warned that progress in Kosovo could be reversed if no agreement was reached on the future of the province.

He said that events on the ground could overtake diplomatic efforts to resolve the issue and "risk the achievements and legacy of the United Nations in Kosovo."

Although ethnically motivated incidents have dropped significantly in recent years, tension between ethnic Albanians and Serbs persist and there are fears they could worsen as Kosovo's leaders prepare to declare independence from Serbia in 2008.