"The United States is ready to facilitate economic normalization!" White House National Security Advisor Robert O'Brien said in a tweet.

In two days of talks brokered by Trump special advisor Richard Grenell, Washington hopes the two sides can finalize proposals to open up road, rail and air communications, which Grenell says could boost the economies of both sides.

But the two remain bitter over a bloody war fought two decades ago, in which 13,000 died.

Kosovo, which broke away and declared its independence with widespread international support, wants Serbia to recognize it as a separate independent nation.

"Our expectations are extremely positive," Hoti told Kosovo media ahead of the two-day talks.

"I believe that today's agreement that can be reached on economic cooperation is a step closer to the final normalization of relations with Serbia, and mutual recognition itself."

"We will do our best to reach a compromise on important economic issues," Vucic said in a statement posted online.

"We want peace, we want stability, we want the progress of Belgrade, Pristina and our entire region," he said.