The US Assistant Secretary of State, Richard Holbrooke, had two hours of talks with Mr Milosevic, following five hours of talks on Thursday. Mr Milosevic then met the Spanish Foreign Minister, Javier Solana, representing the European Union.
Mr Holbrooke later flew to Zagreb for talks with President Franjo Tudjman. The Croat leader said he wanted to avoid further war with rebel Serb forces and denied having drawn a map dividing Bosnia between Croatia and Serbia.
Croatian radio meanwhile claimed Croat forces had taken the Serb-held town of Drvar, in western Bosnia. There was no independent confirmation of the report and the Serbs denied the town had fallen. UN officials reported a build-up of thousands of Croat troops in the Dubrovnik area on the southern Adriatic coast, a likely staging ground for another offensive.
The capture of Drvar would place the Croats within striking distance of Bosanski Petrovac, the last Serb-held town in western Bosnia that separates the Croats from the Bosnian army in Bihac, 19 miles to the north. General Milan Gvero, deputy commander of the Bosnian Serb army, said Drvar's front lines were "strong, stable and unchanged".
However, the Serbs admitted that Bosanski Petrovac had come under Croat artillery fire for the first time. Three Serb civilians were killed and seven injured in shelling of the town, the Bosnian Serb news agency, SRNA, claimed.
United Nations personnel in the Krajina region, retaken from rebel Serbs by the Croatian army, have discovered dead bodies of civilians, some of them mutilated, and what appear to be mass graves.
The UN spokesman, Chris Gunness, said UN civilian police found four dead bodies on Wednesday in Zagrovic, a village near Knin.
Three of them were men with bullet holes in the head, said Mr Gunness, suggesting they had been summarily executed. The right hand of one had several fingers cut off, he said - Serb nationalists use three fingers of the right hand to make a sign signalling Serb unity. The body of the fourth was badly decomposed.
In Knin, the former rebel Serb stronghold, UN personnel counted 96 crosses on four mounds. Mr Gunness said that "despite the authorities' evident effort in preparing the site, the area gives the impression of a mass grave." He spoke of continued "torching and looting of houses", with 39 buildings burning in or near Knin.
Elsewhere, the Christian Science Monitor reported finding evidence near Srebrenica, eastern Bosnia, that supported US accusations that Bosnian Serbs killed thousands of Muslims after overrunning it and Zepa, another UN-protected "safe area." A reporter for the paper said he saw what appeared to be the remains of a human leg protruding from what CIA photos tentatively identified as one of three mass graves near Srebrenica.
European diplomats in Zagreb see little hope of solving the logjam which is preventing deployment of the Rapid Reaction Force in Bosnia.
Many of the British and French troops which make up the force and their equipment are being blocked at the Croatian port of Ploce, and refused the right to move across Bosnian Croat territory.