The United States and its major economic allies continued private negotiations yesterday for a meeting of their finance ministers to reach a new accord on the dollar and revive confidence in financial markets.

The situation was described by an insider as "fluid," and the timing for a meeting uncertain, except that it is unlikely to take place before next Monday at the earliest. U.S. Treasury Secretary James A. Baker III leaves for his Texas home today for the Thanksgiving holiday and will not return to Washington until late Sunday. It is understood that he will have no meetings on international issues in that time.

"After that, anything is possible but nothing is set," said a source. Despite a published report suggesting that preparations for a meeting of the finance ministers of the Group of Seven nations (G-7) might take several weeks, the meeting may take place earlier.

Meanwhile, a West German diplomat in close touch with economic issues said in an interview that the top priority for his government in any G-7 meeting would be to get an agreement that the dollar will decline no further.

"The dollar has already overshot on the downside," he said, meaning that it has gone too low and is undervalued. "You won't solve your balance of payments problems by pushing the dollar lower."

But while the argument for stabilization of the dollar around current levels or higher is logical for the West Germans -- a lower dollar would further depress their exports here -- the United States is not yet ready to make that judgment, even though stabilization is desirable to reassure financial markets.

"You can't assume that the United States has buttoned down its positions" for a new Louvre accord, said an official. The Louvre accord is the most recent exchange rate agreement.

Until yesterday, those closest to the situation had reported that it was unlikely the meeting could be held before Dec. 16, when Congress is scheduled to finish legislation to carry out the $76 billion, two-year U.S. budget agreement.

That still may prove to be a realistic estimate. But several sources raised the possibility that a meeting might be called hurriedly -- even if Congress had not finished all its detailed work on the budget package -- if there were another sharp drop in the world's stock markets.

"We hope that the markets will allow us two weeks" to prepare, a European official said. "The {actual} economic news has not been bad, so we should be able to wait two weeks."

He acknowledged that officials of all seven countries -- the United States, Japan, West Germany, France, England, Canada and Italy -- have been in continuous contact on an agenda for a new G-7 meeting, and that the contacts had increased since the agreement on the U.S. budget package.

Central bankers of the seven nations would join in the discussions with the finance ministers to replace the Louvre accord of last February that attempted to stabilize the dollar at levels much higher than now prevail. A site has not been selected, but Paris or London is thought to be the likely choice.

Meanwhile, in Britain, Chancellor of the Exchequer Nigel Lawson yesterday called again for an early G-7 meeting, special correspondent Jeffrey Ferry reported. Asked how soon it could take place, Lawson said: "It is sufficiently important for us to curb our Christmas preparations for a day or two if we have to."

The general expectation is that the financial leaders will seek a credible new agreement building on the U.S. budget package. Lawson made clear that a primary goal of such a meeting will be to pressure Japan and especially West Germany into more expansionary economic policies.

Lawson, in a speech to the American Chamber of Commerce in London, said that there had been a "successful outcome" of the American budget negotiations, and praised Baker for his catalytic role in the talks.

But he had only mild praise for yesterday's reductions in West German interest rates, although they seemed to encourage a rise in stock markets.

Speaking of the German central bank, he said, "It is encouraging that the Bundesbank has already begun to acknowledge its own key role in the promotion of world economic stability with a modest reduction in short-term rates."

In Washington, a Treasury spokeswoman had only a low-key comment, that the United States "welcomes" short-term interest rate reductions announced yesterday by several European nations.

The German diplomat, warning against a further drop in the dollar, said, "The more the dollar goes down, the more we get squeezed. Or to put it another way, the more that the dollar goes down, the less incentive we have to cooperate {with the United States}. We would be getting mauled."

The question becomes, as one expert put it, at what level to seek stability. The Louvre accord in February stabilized the dollar at too high a level, and this was one of the factors leading to the stock market collapse Oct. 19.

To sustain the February dollar levels, the United States tightened monetary policy, and the financial markets reacted negatively to higher interest rates.

Outside the government, economists think it may be premature to agree to stabilize the dollar at current levels.

"They {the other G-7 nations} have a vested interest in stabilizing the U.S. dollar," said Henry Kaufman of Salomon Brothers. "But it may be in our interest not to have the dollar stabilized for a while."

And economist Robert Hamrin of the Washington Intelligence newsletter said: "Virtually everyone agrees that, to improve the trade deficit, the decline in the dollar currently taking place is necessary. Further, it must decline quite a bit more."

At the same time, Hamrin acknowledged that a continued fall in the dollar raises great uncertainties here and around the world. As the dollar falls and other currencies rise, there is a threat of new inflationary pressures in the U.S. economy, as well as recession in Japan and West Germany.

The dollar's decline could be deflationary overseas because West Germany and Japan depend on exports for much of their economic growth. If their currencies rise in value it could hurt foreign sales.

The West German diplomat said that the appreciation of the mark, which has risen to about 1.65 to the dollar from around 1.80 at the time of the Louvre accord, has already cut German exports to the United States by about 15 percent.

He argued that a further rise in the mark would be counterproductive from the American standpoint because the slowdown it might induce would cut the ability of the nation as a whole to buy U.S. goods.

"If the Americans push the rate down too much, there is no incentive for us to sign another Louvre Accord," the diplomat said.