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In a medium saucepan of boiling salted water, cook the pearl onions until just tender, about 8 minutes. Drain, rinse under cold water and drain again. Transfer the onions to a glass bowl.
Meanwhile, in another medium saucepan, bring the water and vinegar to a boil with the sugar, mustard seeds, coriander seeds and peppercorns. Boil until the sugar is dissolved, about 2 minutes. Pour the liquid over the onions and refrigerate for at least 1 hour and up to 2 days. Drain before serving.