The United States confirmed Thursday it was talking with Libya in London to establish "a fair compensation mechanism" for the relatives of US victims of Libyan terrorist attacks.The State Department said representatives from both countries met in the British capital Thursday and Friday to reach "a claims settlement agreement.""Both parties affirmed their desire to work together to resolve all outstanding claims in good faith and expeditiously through the establishment of a fair compensation mechanism," it said in a statement.A State Department spokesman denied a Libyan newspaper report that the talks also involved compensation for Libyan victims of American military response to Libyan terrorist attacks.