Montenegro's parliament has proclaimed independence for the tiny Balkan republic, forming a new European state and formally dissolving the last union of the former Yugoslavia.

As the declaration was read out in a broadcast assembly session Saturday evening, a fireworks display muted by heavy rain went off over Montenegro's capital, and a red-and-gold Montenegrin flag was raised over the parliament building.

The ancient Montenegrin anthem "Oh, The Bright May Dawn" was played inside the assembly chamber.

Lawmakers had unanimously verified the May 21 referendum, in which a slight majority of Montenegrins voted for the split from Serbia. The independence declaration envisages Montenegro as a "multiethnic, multicultural and multireligious society ... based on the rule of law and market economy."

Despite the pouring rain, a few hundred Montenegrins took to the streets to celebrate their new freedom, apart from Serbia for the first time since 1918. The new country has just 620,000 people.

"This is the moment when new horizons open for my country," said painter Goran Novakovic, 32. "This is the most important day in than the entire century for this country."

"I am extremely happy," student Danilo Radovic said. "The dream of generations of Montenegrins has been fulfilled."

After reading the declaration, which declared the tiny country's national goal as integration into the European Union and NATO, Speaker Ranko Krivokapic said "Long live Montenegro!"

"The citizens of Montenegro, once and for all, have brought back their country into the family of free nations and states," Krivokapic said.

The declaration also said Montenegro would immediately start procedures for admission to the United Nations and other international organizations.