She braved a move to a new country and critical heart surgery, but little Anita Asto -- who won the hearts of the first ladies of Peru and the United States -- simply couldn't come to grips with a candy cane at the White House yesterday.

The 3-year-old Peruvian panicked at the sight of a seven-foot dancing candy cane during the 20th annual White House Christmas party for diplomats' children.

As Mrs. Reagan carried the child into the jam-packed East Room, while the Marine Band played "Frosty the Snowman," Anita's eyes filled with tears and she let out a wail that drowned out the band.

The candy canes danced on.

"I'm not sure what happened," said Diane Ulchak, who with her husband Robert is in the process of trying to adopt Anita. "She loves candy canes."

Anita and the Ulchaks came to Mrs. Reagan's attention this fall, when the Ulchaks wrote and asked her (as well as Peru's first lady) to cut some of the red tape involved in bringing the child into the country for adoption and major heart surgery. Yesterday, at the request of Nancy Reagan, the Ulchaks flew to Washington from Boston for the party.

"You can't believe how sweet Mrs. Reagan has been to all of us," said Robert Ulchak, as Anita clutched an authentic, tiny candy cane. "This has really put us in the Christmas spirit."

Second only to Anita, the other star of the afternoon was Aileen Quinn, who most 8-year-olds know better as "Annie." Complete with her shaggy dog, Sandy, Quinn delighted the 400 kids from 89 countries with a standard medley from the hit Broadway show.

Weatherman Willard Scott, who seems to be the White House's favorite Santa Claus, belted out "Santa Claus Is Coming to Town" with the throaty fervor of a nightclub act. The screeching throng went wild.

After Christmas carols and dancing candy canes, the pint-sized version of the United Nations adjourned to the State Dining Room where fistfuls of chocolate cookies and fruitcakes were consumed fast enough to cause some pretty good stomachaches.

No less than eight Christmas trees and hundreds of poinsettia plants decked the State Rooms. All the little boys took home wooden trucks and the girls got "Annie" dolls.

"It was much better this year," maintained 11-year-old Augusto Wallach of Peru, a three-year veteran of the party. "There were more acts this year. Last year we had a lot more time so we waited and went to the bathroom a lot."

Five-year-old Michal Bednarz of Poland had no such complaints. It was his first year at the White House. "It's good because you get drinks and treats and get to see clowns and Santa Claus," he explained.

"Last year, they made us take a long tour of the house and it was boring," noted Mariana Lima, 9, of Brazil. "It was much more fun this year."

Nine-year-old Keiichiro Otsuka of Japan announced that he was available for an interview about his third White House Christmas party.

"It was good because the band played," he said. "I liked it best because of Annie and the dog. I want to come next year but I can't. My Dad has to go back to Japan. But they have Christmas there, too, you know."