VITINA, Yugoslavia (AP) _ A grenade attack that ripped through an ethnically-mixed market in Kosovo also shattered U.S. hopes of restoring order in a tense sector where Albanians and Serbs chip the veneer of renewed cohabitation with near daily attacks.

The market _ where ethnic Albanians returned from exile were buying fresh produce, cheese and live chickens _ was the perfect target for terror.

Agitators determined to continue a cycle of violence and retribution in the province's tense western sector tossed the grenade between the Albanian stalls and a Serb grocery on market day last week, injuring nearly 30 people. American soldiers on foot patrol were only 100 paces away.

Fallout from the explosion was felt almost immediately.

``We went from talking about how to reopen the factory one minute to running a mass casualty unit the next,'' said Capt. Matthew McFarlane, the 29-year-old area commander from Burke, Va., and de facto mayor of Vitina, a mixed town in western Kosovo.

``This is one of the towns where Serbs stayed. We were happy about that, but now we realize it has increased our work,'' he said.

The volatile ethnic mix of an estimated 7,000 fearful residents, still roughly at prewar proportions of 65 percent ethnic Albanian and 35 percent Serb, has put Vitina at ground zero of Kosovo's ethnic conflict.

After weeks of attacks on Serbs, the market blast on Thursday was the first to claim ethnic Albanian victims in the Vitina region.

Soon after the blast, the Americans detained three Serbs in a pair of apartment buildings overlooking the market. Dozens of weapons were confiscated in an apartment-to-apartment search of the Serb buildings.

That night, ethnic Albanians preparing a revenge attack were thwarted when U.S. soldiers arrested 13 Albanians, including Kosovo Liberation Army soldiers, hiding in a house. They had four AK-47s, grenades and three fire bombs. ``It was clear they were going to set a house on fire,'' said Lt. Jake Kramer of Shaker Heights, Ohio.

Angered, Serbs stopped showing up for work at the hospital. On Sunday, a Serb convoy of 56 cars drove women and children to the province's border leading to the main part of Serbia less than 10 miles away.

``They are making us look stupid with what's going on,'' said Staff Sgt. Derek Heavener of Alma, Mich., as he investigated a small explosion Friday.

Damage from that blast was minor: a charred patch of grass and a nicked fence.

But it ignited Serb anger, and a small mob shouted at American soldiers that they would patrol Serb streets themselves and kill any Albanian who dared to drive down them.

``With what's been going on and the amount of people we have, we're stretched thin,'' Heavener said.

And it will stay that way until U.N. administrators in Pristina are able to win cooperation of national Serb and Albanian leaders to establish local administrations that can take some of the load off NATO. Progress there _ as in Vitina _ is blocked by ethnic hatred that has precluded any real cooperation.

Until then, NATO troops in five sectors not only police their areas but also are on nonmilitary duty _ restoring essential services, such as hospitals, public sanitation, fuel distribution and firefighting capacity.

McFarlane is seeking the help of leaders from both of Vitina's communities. But the past makes it difficult.

Serb leader Vesko Piric became mayor of Vitina after the Albanian mayor was expelled from the post in 1989, and is accused by the Albanians of responsibility for war crimes.

Ethnic Albanian leader Daut Xhemajli, a human rights activist who became a local KLA commander during the war, cites three massacres that allegedly occurred under Piric's command: in the towns of Julicar, Smira and Lubic, all in April.

McFarlane is aware of the allegations against Piric, but continues the contact in the absence of proof. ``He's got the ears of all the Serbs. They listen to him,'' he said.

The day after the market blast, Piric appeared to withdraw his cooperation, failing to show up for their regular meeting. Instead, he demanded McFarlane close the local KLA offices and Albanian cafes for a week.

``If Serbs stay ... the winner will be peace,'' Piric said.

McFarlane's jaw tightened at the implicit ultimatum. An exodus of Serbs would undermine the international community's goal of preserving an ethnically mixed Kosovo. But McFarlane had heard this threat before.

``If you go, that's your choice,'' he replied firmly.

Later, a U.S. Humvee on patrol passed a trailer loaded with furniture and crates.

``That's probably a Serb,'' said Staff Sgt. Bryan Segars of Grand Prairie, Texas. ``We've been seeing some of that.''