SARAJEVO, Bosnia-Herzegovina (AP) _ Flushed with success after a two-day offensive, government forces dug in Saturday to secure ground gained against Serbs near Sarajevo, and fought on toward more Serb positions.

The Serbs, meanwhile, moved 12 U.N. hostages to Pale, their stronghold outside the capital. And French President Jacques Chirac, speaking at the Group of Seven industrialied nations summit in Halifax, Nova Scotia, said Saturday afternoon that the last hostages would probably be free ``in the next few hours.''

Bosnian army forces who cut a key Serb supply route southwest of the city battled Saturday for control of a high hill that would seal their mastery of the road and remove its exposure to Serb guns, said U.N. spokesman Lt. Col. Gary Coward.

Firefights flared in and around Sarajevo on Saturday after both Serb and government forces raided U.N. weapons collection points overnight.

But nothing matched the intensity of Thursday's or Friday's battles, when the Muslim-led Bosnian army pounded Serb opponents with artillery, missile and infantry assaults. In retaliation, the Serbs turned tanks and artillery on Sarajevo.

``The Bosnian army has made some fairly significant gains around Sarajevo,'' said U.N. spokesman Chris Gunness.

In some places, the government army narrowed the Serb ring around Sarajevo, said a senior U.N. official, insisting on anonymity. It is now just 2.5 miles wide at its narrowest point west of the U.N.-controlled airport.

``It's certainly the most ambitious, the most complex'' operation launched by the government since war erupted in April 1992 with a Serb rebellion, Coward said.

Government leaders, concluding that they alone can save their people, have warned for months they would try to break the siege of Sarajevo before a fourth winter passed.

The situation has grown steadily more critical since April, when the humanitarian airlift that has kept the city alive was suspended because Serbs were firing on planes. Warehouses this week were virtually empty in the city.

The most important government gains were made on Mount Trebevic, one of the peaks above Sarajevo, where the Bosnian army cut through Serb lines and severed the road linking Serb-held parts of Sarajevo to Pale, Coward said.

Two grenades landed in woods outside Pale on Saturday morning. Neither caused damage or injuries. One, though, hit very close to the factory that Serb leader Radovan Karadzic recently made his headquarters. Later in the day, Karadzic's 28-year-old daughter, Sonja, and 250 guests feasted on roast lamb and piglets there during her wedding reception.

The exact casualty toll from the two-day offensive was unknown.

At least 16 Bosnian government soldiers were killed Friday, according to hospital officials. Nine civilians were killed and 53 wounded in government-held Sarajevo in the two-day offensive, and Serb sources said they lost six civilians, with 80 wounded. Six French peacekeepers were wounded Friday.

Serbs moved 11 Canadian peacekeepers and one unidentified U.N. monitor to Pale on Saturday. The 12 men had been held hostage in Ilijas, some 12 miles north of Sarajevo, since May 27, but that region has seen heavy fighting this week.

They are among the last 26 U.N. peacekeepers detained by the Serbs as insurance against further NATO airstrikes. More than 370 had been seized.

Karadzic said earlier this week that the remaining captives would be free within days, but Serbs also want four colleagues held in Sarajevo by the United Nations to be freed before all hostages are released.

Plans are under way for a rapid reaction force of 12,500 to bolster the beleaguered peacekeepers.

On Saturday, fighting concentrated southwest of the city, where Bosnian forces have launched a push from Mount Igman toward government-held Sarajevo. Heavy outgoing fire, either from tanks or howitzers, echoed from Bosnian Croat positions in Kiseljak, west of Sarajevo, Saturday afternoon. Bosnian government and Bosnian Croat officials confirmed Friday that the two armies were cooperating for the first time against the common Serb enemy around Sarajevo.

The Serb news agency SRNA said two civilians were killed and several wounded Saturday in government shelling of Ilijas.

In Visoko, some 16 miles northwest of Sarajevo, the Bosnian army fired for at least an hour after a Serb shell landed, Associated Press reporter Maud Beelman said from the frontline town.

Beelman and an Agence France-Presse reporter were detained briefly by police in Visoko before being ordered to leave.