MICHAEL ENDE's The Neverending Story has made a name for him around the world. That book and this one, Momo, were on German best-seller lists for an astounding five years apiece, and Momo's back jacket flap describes the author as a "veritable publishing phenomenon," which is clearly undeniable. I will say up front that I have not read The Neverending Story, though it was a best seller here as elsewhere. But for the task at hand, that's an advantage. Each book from a given writer's hand should be judged on its own merits, well apart from any glow -- or shadow -- cast by its predecessors.

Momo is a little girl with two unusual gifts. First, she is the essence of innocence and puriy, and second, she knows how to listen and her listening has the effect of liberating and invigorating the people who talk to her. She lives in a small chamber under a crumbling amphitheater somewhere in Europe where such ruins are likely to be found, and she is either an orphan or a Miraculous Child of the sort not womb-sprung -- Ende never says which.

Because of her gifts, she is surrounded by friends of all ages, but most are children who, with her to inspire them, make up elaborate games of fantasy and hear elaborate fantasy stories from Guido, one of their number. For there is plenty of time. In the part of the city where Momo lives, all the people lead villagelike lives where there is plenty of time. Time, Ende suggests, is the single ingredient required for caring, love, and happiness. And time can be stolen, whereby hangs this tale.

Little by little, with no one quite aware of it, the city is taken over by a curious host of Men in Gray -- gray suits, gray derbies and briefcases, gray faces. But they are not men exactly. Probably we are meant to read them as the spirits of Big Business. In any case, they come to power by convincing one person after another to stop wasting time and start saving it, and as the pace in the city quickens, they steal the saved time and freeze it in a vault in their corporation headquarters. But Momo, in her incorruptibility, is a threat to them. They plot to be rid of her, and soon, with her friends falling away from her and the gray men in pursuit, she follows a magical tortoise to a place called Nowhere House, where a magical being named Professor Hora is in charge of time and its distribution. Between them, and by means of events best left to the author to describe, the men in gray are destroyed and life returns to its normal, leisurely pace.

In a way, this story is a kind of phenomenon. Over and over it teeters perilously close to the manipulatively sentimental -- which may be one disheartening reason, as with Shel Silverstein's The Giving Tree, for its success. Occasionally it singles out exhausted, if not dead horses, like Barbie dolls, and beats them anew. And it attempts to bring new significance to old assumptions, such as busy-people-don't-have-time-for-their-kids.

BUT AMONG these irritations, there is real ingenuity to its imaginative force. Professor Hora's discourses on time may raise a lot of questions. (Ende neatly acknowledges and avoids responsibility for this difficulty in an Author's Postscript, wherein he passes the buck to a shadowy figure who, we are told, related the whole story to him once on a train.) But they are thought-provoking just the same. And the conception and shapes of its fantasy devices are charmingly fresh.

Viewed as a fable which is intended to illuminate the modern human condition, Momo fails. It is too simplistic and too full of clich,es, and the world presented at its outset, which is restoed at its conclusion, is a world lost and gone forever. However, viewed as a straight fairytale, particularly in its latter two parts where things move briskly, it works very well indeed. Part One goes very slowly, with wandering tales within the tale and long asides, as if the gray men, not yet in their ascendancy, were needed to speed things up.

Is it a children's book? Not here in America. Even Richard Adams' Watership Down was published here for adults, and our own James Thurber's The Wonderful O, in many ways a Momo in microcosm, was marketed that way. We think children need stories low on philosophy with fast starts and faster finishes. Whether we are correct or not is moot.

It is impossible not to wonder if Ende has seen himself in the character of Guido, the storyteller, who achieves tremendous but ruinous success under the influence of the gray men. "Once upon a time his imagination had soared along," but the wider his acclaim grew, "the sillier and more sentimental his stories became. . . . 'Amazingly inventive' was the newspapers' pet description of him," but "Guido the dreamer had. . . become . . . the hoaxer." I hope this is not the surfacing voice of a wistful Ende. Books like Momo are popular because they answer some genuine need on the part of readers, and as long as the need exists, writers like Ende are a blessing. CAPTION: Picture, Michael Ende. Copyright (c) by Jerry Bauer