With carefully chosen words and an eye to averting a possible diplomatic backlash in Washington, Prime Minister Zenko Suzuki met today with Yasser Arafat for the first talks between the leader of a major U.S. ally and the Palestine Liberation Organization chief.

During a one-hour meeting on the last full day of Arafat's "unofficial" visit here, Suzuki stuck close to Japan's policy favoring mutual recognition between the PLO and Israel, PLO participation in Middle East peace talks and formation of an independent Palestinian state.

According to the senior Foreign Ministry spokesman, Suzuki also stressed Japan's "immovable, friendly" U.S. ties and suggested that his government would continue to consult closely with the United States and its major Western allies on diplomatic moves in the Middle East.

The death of Egyptian president Anwar Sadat has amplified protests in the United States, Israel and political circles here over Tokyo allowing Arafat's visit at the invitation of a group of parliament deputies.

In Jerusalem, Israeli Foreign Minister Yitzhak Shamir summoned Japan's charge d'affaires to receive a formal protest against the "unfortunate" reception of Arafat by high-ranking officials in Tokyo, Washington Post correspondent William Claiborne reported.

The Japanese Foreign Ministry spokesman said Suzuki told Arafat that a "just, lasting and fundamental peace" rests on the Arabs acknowledging Israel's existence and Israel "simultaneously" recognizing Palestinian rights to self-determination.

Suzuki said the Palestinian problem was at the "heart" of the conflict and called on the PLO and Israel to avoid "confrontation through violence or force." Both parties, he said, should work toward peace on the basis of mutual recognition, and "if they do move in this direction, Japan will be second to no one in extending cooperation."

Arafat, according to press reports, did not respond to Suzuki's suggestion. At a press conference later, Arafat refused to answer reporters' questions on the possibility of PLO recognition of Israel.

The PLO chief did indicate strong support for the eight-point peace proposal made in August by Saudi Crown Prince Fahd, calling it "a good basis for a comprehensive peace in the Middle East." He refused to elaborate on his remarks, saying the issue would be discussed at the Arab summit conference in Morocco next month.

The Saudi proposal calls for the formation of an independent Palestinian state and for the right of all Middle East states to exist in peace. It has been interpreted as implying recognition of Israel, and Japanese diplomatic analysts viewed Arafat's remarks here as a possible softening of the PLO's position.

Skirting the issue, however, Foreign Minister Sunao Sonoda told Arafat in separate talks today that negotiations on the Camp David accords should continue so that "a new dimension" might be opened in future Middle East peace talks. According to the Foreign Ministry spokesman, Sonoda indicated that the Saudi proposal "would be one of the bases" for such discussions.

Japanese and PLO officials declined to confirm reports that Arafat had asked Japanese leaders to recognize the PLO as the sole representative of the Palestinians and that its Tokyo office be accorded full diplomatic status.

Foreign Ministry officials, however, said that Japan's position had not changed as a result of the talks. Tokyo does not extend diplomatic relations to the PLO and sidesteps the issue of recognition of its status by referring to it as an "important" representative of the Palestinians.

To the apparent relief of Japanese officials, Arafat refrained from the criticisms of the slain Sadat that marked the Palestinian's stops in China and North Korea. He made no public mention here of the late Egyptian leader.

Sonoda, in his talks with Arafat, stressed that Japan would "continue efforts to have more dialogue between all parties concerned, including Israel and the U.S.," a Foreign Ministry official said.

But diplomatic observers here pointed out that Japan's actual bargaining position in the Middle East is likely to remain limited because of its overwhelming reliance on Arab countries as a source of oil supplies, its lack of military clout and its key relations with the United States.