Croatia could withdraw a genocide lawsuit filed against Serbia if relations between the two countries are improved, the Croatian president says.

President Ivo Josipovic raised the possibility during his first trip to Belgrade since his election this year.

The government of Croatia still wants Serbia to punish individuals accused of war crimes during the 1990s war.

But both nations now say reconciliation is possible, years after the the break-up of the former Yugoslavia.

Both President Josipovic and his Serbian counterpart Boris Tadic have stressed there is a new era of cooperation between the two countries....