A band of alleged terrorists uncovered by security police last week may have links to the Italian Red Brigades and an extremist Iraq-based Palestinian group suspected of responsibility for the murders of two prominent Arab moderates, Egyptian authorities say.

At least seven persons, including a Swiss man and a German woman, are under arrest.

But it appears that at least 10 others, Arab and Europeans, were released after being interrogated. That combined with the refusal of the authorities to disclose details of the case, raised doubts among some foreign observes about the seriousness of the alleged plot.

Prosecutor General Ibrahim Kalyoubi says it was "a hostile scheme directed against the security of the state." Other officials have told newspapers here that the suspects plotted to murder prominent Egyptians.

The record of past terrorist incidents here indicates that the Egyptians do not invent these plots out of nothing, but hey do something exaggerate the degree of menace or the ties to foreign groups or countries.

According to sketchy and sometimes conflicting information made available to the press, the alleged plotters had some links with the Red Brigades, the Italian terrorists who kidnapped former Premier Aldo Moro.

Palestinian members of the ring, police claim, belong to an extremist splinter group headed by a man known as Abu Nidal.

This group, the Egyptian say, is responsible for the shooring last January of Said Hammami, the London representative of the Palestine liberation organization, and the murder in Cyprus in February of Yussef Sebai, a prominent Egyptian journalist.

Two Palestinians have been sentenced to death by a Cyprus court for Sebai's murder. The killing of Hammani remains unsolved. In both cases, Arab press speculation has focused on Abu Nidal, but as far as could be determind here this linkd has not been definitively established.

Abu Nidal broke away some years ago from the main Palestinian guerilla organization, Fatah, headed by PLO Chairman Yasser Arafat, and has been living in Bahgdad, Fatah has sentence him in absentian to death. The Egyptians claim that the alleged terrorists arrested here call themselves "the correct line of Fatah."

If it is true that potential terrorists linked to Abu Nidal's group or to the Red Brigades are operating in Egypt, it is a serious matter for a country that considers inself vulnerable to terrorism. Especially since the border war with Libya last year and President Anwar Sadat's peace overture to Jerusalem, the Egyptians have been aware of this country's potential as a terrorist target.

The seven persons under arrest have not yet been formally charged. They include three Palestinians and two Jordanians, whose names have not been made public. The German woman has been identified by the Cairo press and the West German embassy as Elvira Gunter, who was studying Arabic at a German-run cultural center here.

The Swiss man has been named as Sergio Mantovani, 34. Police sources say he may have been in Cairo, accredited as a journalist, during the Cairo peace conference in January when scores of Israeli officials and correspondents were have.

He was accused in all three Cairo papers yesterday of serving as the contact between Abu Nidal's group and the Red Brigades, "so as to coordinate work by the two organizations for launching subversive acts as well as the murder of some Egyptian and foreign dignitaries living in Egypt.