PALE, Bosnia-Herzegovina — Gunfire and an explosion resounded early Thursday as NATO troops surrounded a building in Pale, the town where Bosnian war crimes suspect Radovan Karadzic has taken refuge. But a spokesman for Bosnia's NATO-led peacekeepers later said the soldiers had failed to find the fugitive.

"We did not locate the person we were looking for," said Capt. Dave Sullivan of Canada. While he did not name the suspect, it appeared clear that the sweep had been a renewed attempt to capture Karadzic. Pale was the headquarters of Karadzic, the leader of Bosnia's Serbs during the republic's ethnic war - Europe's worst bloodshed since the Second World War.

He has been indicted by the United Nations tribunal in The Hague, Netherlands, on war crime charges.

Earlier, Sullivan had spoken of "an ongoing operation regarding persons indicted for war crimes," but declined to go into details beyond saying that international troops were involved.

An international official, who declined to be identified, nonetheless suggested the operation was an attempt to capture Karadzic, telling The AP: "You know who was and is in Pale, and what Pale is about."

About 100 residents - some angry, others confused - gathered around the area, cordoned off by peacekeepers with white tape in the centre of Pale. Bursts of machine-gun fire were heard along with an explosion. Helicopters landed and took off with two people on stretchers on board.

A local policeman who asked for anonymity said two Bosnian Serbs were killed but offered no details. There was no immediate formal confirmation.

Local police and British peacekeepers surrounded the building, said to be the home of three Serb Orthodox priests. The crowd later dispersed.

The operation appeared to be the latest in a series of unsuccessful NATO attempts to arrest Karadzic, said to be on the run inside the Bosnian Serb half of Bosnia.

The indictment against Karadzic and Ratko Mladic, his fugitive wartime general, accuses them of being "criminally responsible for the unlawful confinement, murder, rape, sexual assault, torture, beating, robbery and inhumane treatment of civilians."

They also are accused of "the targeting of political leaders, intellectuals and professionals; the unlawful deportation and transfer of civilians; the unlawful shelling of civilians; the unlawful appropriation and plunder of real and personal property; the destruction of homes and businesses; and the destruction of places of worship."

Among actions the two are accused of masterminding is the massacre of more than 6,000 Muslims in Srebrenica, which came to be known as Europe's worst slaughter of civilians since the Second World War. The indictment described the 1995 Srebrenica killings by Bosnian Serb troops as "truly scenes from hell, written on the darkest pages of human history."

The indictment also links them to the 3½ year-long shelling and siege of Sarajevo, the Bosnian capital, kept surrounded by Bosnian Serb military forces from the start to the end of the war.

The war began in early 1992, after Bosnian Serbs refused to honour the results of a February referendum accepted by the republic's Muslims and Croats that called for its secession from Yugoslavia. Ensuing clashes led to full-scale war that killed hundreds of thousands and left close to a million others homeless.

The breakup of the former Communist federation of Yugoslavia began a year before that with the bloody secession of Slovenia and Croatia. Other parts of the six-republic Balkan union also declared independence, and by the end of the Bosnian war the country was made up only of Serbia and Montenegro.

New large-scale ethnic bloodshed erupted in 1998, with a crackdown by Serb-led troops on Kosovo's ethnic-Albanian majority. That violence ended in mid-1999 when troops loyal to Yugoslav president Slobodan Milosevic pulled out of the province in exchange to an end to a 78-day NATO air war on Yugoslavia, leaving Kosovo to be administered by the UN and policed by NATO.

Milosevic now is being tried by The Hague tribunal for his alleged role in the war crimes of the Croatian, Bosnian and Kosovo wars. Yugoslavia itself ceased to exist last year and was formally replaced by a new state called Serbia and Montenegro.