A federal jury found today that former Israeli defense minister Ariel Sharon had been defamed by an article in Time magazine, the first of four legal hurdles he must clear to prove his claim of libel.

After more than 14 hours of deliberations over three days in the $50 million lawsuit, the six jurors said the average reader of the paragraph at issue would understand it to mean that Sharon had "consciously intended" that hundreds of Palestinian civilians would be massacred during military operations in Beirut in 1982.

The jurors also said they believed that the paragraph's "defamatory effect" was "aggravated" by its contention that the secret appendix of an Israeli commission's report contained details of an allegedly damning conversation Sharon had the day before the killings.

Time conceded last week that it had been wrong in reporting that the appendix contained notes of the conversation. The admission came after a Time representative, with permission of the Israeli government, inspected secret documents bearing on the case.

Sharon's case would have been lost if the jury had ruled against him on the defamation question. For him to win, the jury still must find that the disputed paragraph was false and that it was published with "actual malice."

If Sharon prevails on all three counts, the trial will go into a second phase to determine whether the controversial former general's reputation was hurt and whether he should be awarded damages.

The jury retired for the night about 9 p.m.

Immediately after the panel had gone back to the jury room to deliberate the other issues in the case, Time magazine spokesman Michael Luftman handed out a press release that said in part:

"Time continues to believe that the article was substantially true and we could have proven that had we been given adequate access to secret Israeli documents and testimony . . . . On this charge, the jury completely misread what Time said.

"This is only the first of the three issues which the jury must decide in this part of the trial and we remain confident that we will prevail."

Later, Sharon, obviously pleased with the partial verdict, said: "I'm sorry that Time magazine thinks the jury doesn't understand plain English."

But he added, "I understand that there is still a long way to go and I would not like to comment any more."

Lawyers representing Time were somber in contrast to the press release and comments by Ray Cave, Time's managing editor.

"We are holding out total hope," Cave said. He added that Time "will make no effort to settle the suit," confirming that several unsuccessful attempts for an out-of-court settlement had been made by U.S. District Court Judge Abraham D. Sofaer.

The paragraph at issue in the trial dealt with Sharon's role in the 36-hour rampage of killings in two Beirut refugee camps by Lebanese Christian Phalangist militia and with the findings of an Israeli commission that investigated the massacre.

Sharon has asserted that he sent the Phalangists, who are allied with Israel, into the camps to root out Palestine Liberation Organization guerrillas suspected of hiding there. The commission found Sharon to be "indirectly responsible" for the slaughter on the ground that he should have foreseen the massacre because of the militia's high state of emotion following the assassination of their commander, Lebanese President-elect Bashir Gemayel, two days earlier.

In reporting on the commission's findings in February 1983, Time said a secret Appendix B contained details of a conversation in which Sharon, during a condolences call on Gemayel's father and brother the day before the massacres, "reportedly discussed with the Gemayels the need for the Phalangists to take revenge for the assassination of Bashir . . . ."

Sharon, calling the paragraph a "blood libel," promptly sued the magazine, first in a case pending in Israel and later in New York.

The Time report was based on a dispatch by correspondent David Halevy, an Israeli citizen long active in Labor Party politics opposed to Sharon's Likud bloc.

A statement in this week's edition of the magazine concedes that Time erroneously had said the Sharon conversation with the Gemayels was in Appendix B. It did not use the words "correction" or "retraction" but defended the article as being substantially accurate.

An article reporting on the Sharon case said Time had as recently as two weeks ago checked with its confidential sources and "they confirmed once again to Time that revenge had been discussed."

Today, when asked who at Time had done the rechecking, Cave responded, "Of course it was Halevy who checked the sources. They were his sources."

Legal observers favoring Time here were concerned today that the jurors might be even less reluctant to find in favor of Sharon on the next issue to be decided: whether the controversial paragraph was false.

Former Israeli chief justice Yitzhak Kahan, who had headed the commission that investigated the massacre and who reexamined key documents on Jan. 6 in Jerusalem at Time's initiative, reported that he had found no basis to support disputed assertions in the paragraph.

A Time representative, former Israeli minister of justice Haim Zadok, expressed "reservations" about Kahan's conclusions. His concerns were largely over whether he, Kahan and a Sharon representative had been permitted to see all documents relevant to the trial.

"As long as it stays secret," Time lead attorney Thomas Barr said today, "reasonable people are going to ask why is it being kept secret? Nobody believes it's being kept secret for national security reasons."

The third issue facing the jury is whether the paragraph was the product of "actual malice" -- a somewhat elusive concept in American law that does not connote bias or hatred but means roughly that a publication had a "high degree of awareness" that information about a public figure was false when it was printed.

This concept, the major protection American courts have granted the press in writing about public officials, had been considered the bulwark of Time's defense. It was the major point that Barr emphasized in his closing arguments last Thursday.

Sharon's lead lawyer, Milton S. Gould, in his summation to the jury the next day, ran out of time before detailing Sharon's argument for "actual malice."

But in the 21 pages of instructions on that issue alone that Sofaer read to the jury Monday and later sent to them in the jury room, he took the unusual step of providing a kind of road map on "actual malice."

"You should draw no inferences whatever from this effort to provide new guidance in rendering your verdict," Sofaer told the jurors.

Time lawyers had strenously objected to this portion of the charge, fearing the panel would give it great weight, despite Sofaer's caveats.

The six jurors clearly had wrestled with the complex arguments over language in deciding today that Time had defamed Sharon. At their request, they were provided with an unabridged Webster's dictionary, a blackboard, file folders and court exhibits