By Aleksandar Vasovic

BELGRADE (Reuters) - Serbia indicated on Wednesday it was ready to loosen its hold on a minority Serb region of neighboring Kosovo in what may mark a major concession by Belgrade as it pushes for talks on joining the European Union.

Majority-Albanian Kosovo declared independence from Serbia in 2008, but Belgrade does not recognize the secession and continues to wield control over a Serb-populated area in the north of the young country.

Serbian Prime Minister Ivica Dacic, who is taking part in EU-mediated talks with Kosovo, said the Serb minority should be governed by its own autonomous institutions in Kosovo, not directly by those of the Serbian state.

"We talk about the institutions of Serbia, but what we need are Serb institutions that are recognized by all participants in the (EU-mediated negotiation) process," he said.

Dacic did not give any details on how autonomous institutions for the Serb minority in Kosovo might work.

But any dismantling of Serbian state bodies in northern Kosovo would mark a major concession by Belgrade as Dacic's coalition government bids to open accession talks with the EU in the first half of the year.

"This is the first time we are suggesting the existence of the Serb community (in Kosovo) and its autonomy, and the existence of the Pristina authorities of which, at the end of the day, that autonomy is part," Dacic told a news conference with Serbia's nationalist president, Tomislav Nikolic.

"That's our vision of how to resolve the problem of institutional parallelism," he added.

Serbia lost control over Kosovo in 1999, when NATO bombed for 11 weeks to halt the killing and expulsion of ethnic Albanian civilians by Serbian security forces fighting a two-year counter-insurgency war.

The Serbian army and police withdrew and Kosovo became a ward of the United Nations, but Belgrade retained de facto control over a small slice of the north where up to 50,000 Serbs live.

The EU says that control must end if it is to move forward with Serbia's bid to join the bloc more than a decade since the fall of late Serb strongman Slobodan Milosevic in 2000.

Serbia became an official candidate for membership in March last year. Neighboring Croatia is due to join in July and Dacic said it was indisputable that Serbia's economic interest lay in further integration with mainstream Europe.

"Our aim is to get a date for the start of negotiations with the EU. We have no time to lose," Dacic told the news conference.

He reiterated that Serbia would never recognize Kosovo as a sovereign state, something the EU is itself divided on. More than 90 countries have recognized Kosovo's 2008 declaration of independence, including the United States and 22 of the EU's 27 members.

Tensions in northern Kosovo have frustrated plans by NATO to reduce its peacekeeping force in the country to below 6,000 soldiers.

Talks between Dacic and Kosovo Prime Minister Hashim Thaci are due to resume on January 17, mediated by EU foreign policy chief Catherine Ashton.

(Writing by Matt Robinson; Editing by Andrew Heavens)