British troops guarding a building filled with Serb officials killed two ethnic Albanians early today during a night of celebration here in the Kosovo capital.

Witnesses said one of the dead men had been standing on the roof of a white car shortly after midnight, firing a Kalashnikov assault rifle into the air.

Three British paratroops opened fire on the car because "they feared their lives were in danger," said British army spokesman Lt. Col. Robin Hodges.

But witnesses said the gun was pointed up into the air. They said the paratroops opened fire on the car when it was a half block past them and moving away from the Temporary Executive Council building they had been summoned to guard.

They had been called early in the evening by a group of 50 Serbs who felt threatened when thousands of ethnic Albanians took to the streets to celebrate the ninth anniversary of Kosovo's declaration of independence.

The declaration is not recognized by other nations but is deeply meaningful here.

The incident brought an exultant night to a sobering end.

For a few hours Friday, ethnic Albanians forgot the war that drove many of them from their homes and the troubles facing them since NATO peacekeepers arrived in the province.

The European and American forces, who replaced Yugoslav forces who withdrew after the 78-day bombing campaign, have been primarily occupied with protecting Kosovo's minority Serbian population from reprisals by returning ethnic Albanians, a great many of whom suffered atrocities at the hands of Serbian forces.

But enforcement varies by sector. Kosovo's north, patrolled by French troops, was becoming a chronic trouble spot until British Lt. Gen. Mike Jackson threatened to allow British forces to patrol there as well.

In the west, Italian troops early last week stood by as Serbian and Gypsy homes were burned by ethnic Albanians, and members of the Kosovo Liberation Army patrolled in uniforms banned under the rebel army's demilitarization agreement with NATO.

The British, by contrast, have been markedly aggressive peacekeepers since arriving in Kosovo's central section.

The area includes Pristina, the capital city, where urban patrol practices learned over years in Northern Ireland have been on display.

At roadblocks and on foot patrol, the "paras," as the paratroops are known, banter with the locals, many of whom appear to adore them. But at the first whiff of confrontation, guns are up and orders shouted in a torrent of expletives.

"Shut the [expletive] up!" a paratrooper screamed at a Serb, a former special policeman, who was spread-eagled at a Pristina roadblock after he was found carrying a 9mm handgun in a shoulder holster.

The suspect was answering a reporter's questions, which the soldier allowed only to scream abuse at the Serb's every answer. The former policeman was arrested because the only Kosovo residents allowed to carry weapons are a few senior KLA commanders and their bodyguards.

On Friday night, however, guns were much in evidence. Automatic weapons fire rang out across the city during the celebration, and later heavier weapons could be heard. British troops shrugged it off, and NATO made clear they should.

"There was a good amount of celebratory fire, which we know is customary in this part of the world," said Dutch Maj. Jan Joosten, a NATO spokesman.

"We exercised restraint because of the good atmosphere."

Witnesses said the lighthearted atmosphere also prevailed outside the building where Serbian officials had hunkered down at the far end of the downtown street that was an impromptu parade route.

By midnight, when the fatal shootings occurred, drinking had coarsened the atmosphere only a bit.

"As I saw it, the guy took out the AK-47," said Hasan Azemi, 22. "He was on the roof of the car and fired a couple of shots -- pow, pow. And the NATO troops told him to stop shooting and they shot at him."

Azemi said he saw the man crumple, raise his head once and, apparently, die on the spot. A second man later died at the hospital.

Three others were seriously wounded, NATO officials said.

Asked if the man had leveled the gun, Azemi said, "Only up." His companion, Nusret Ramadani, 21, agreed.

NATO officials, who said the shooting is being investigated, stood by the troops. "If any soldier feels that his life is in danger, he is going to defend himself," Joosten said. "I am not going to disagree with the decision made by those on the ground."

CAPTION: NATO troops in Kosovo, like these German soldiers patrolling in a burning Serbian village north of Prizren on June 23, have been authorized to fire their weapons when they believe they are under attack or in danger.