The Terrace Theater's first anniversary celebration continued last night with a program of Japanese music as visually seductive as it was musically provocative. When the performers came out they removed their sandals before mounting a low, red-carpeted platform where they sat upon their knees to play, the women in kimonos and the male flutist in pleated skirtlike trousers. Their instruments were the long and lovely, slightly arching koto, a Japanese version of the zither, and the Sangen, a three-stringed lute played with a tortoise-shell pick the size of a small paddle and the shakuhachi, a bamboo verticle flute.

Musically, the most interesting works were the ones closest to the traditional style. With western influences the music tended to lose its special strength and angular expressive quality. This difference became particularly apparent in "Kanko," a comtemporary song that juxtaposed traditional and western singing styles.

Though given a lovely performance by the engaging Yoshi Hirano, the western style seemed refined to the point of blandness next to the nasal traditional style, which sounded as uneven and unpredictable as life itself.

Flutist Takashi Uchida at times achieved a haunting disembodied sound, a shakuhachi ideal and extremely difficult to manage. The program will be repeated tonight and tomorrow night at 8.