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A cluster-beam deposition technique has been used to produce magnetic clusters embedded in a nonmagnetic matrix. We report here on films with cobalt clusters of average diameter of 5.5 nm embedded both in Cu and Ag. Volumetric concentrations of Co ranged from 10% to 50%. Magnetization and low temperature hysteresis loops, both field cooled (FC) and zero-field cooled (ZFC), have been measured between 4.2 and 300 K. The FC and ZFC magnetization bifurcate at or above room temperature with the clusters having a nonzero remanence at room temperature. Low temperature hysteresis loops exhibit a two-phase nature with one phase displaying exchange bias upon field cooling, suggesting the presence of an oxide phase. Conditions under which the oxide is present have been studied.