The federal jury deciding Ariel Sharon's libel claim determined today that the Time magazine paragraph at issue in the case was false.

The former Israeli defense minister now has prevailed on the first two of four elements necessary to establish his claim of libel and win a damage award.

The jury had decided Wednesday that the paragraph was defamatory. Now it must determine whether Time published it with "actual malice" and, finally, whether it injured the reputation of the controversial former general.

Appearing solemn and drawn after deliberating whether the paragraph was true or false for more than two days, the six jurors said they believed Sharon's denial of the allegation in a Feb. 21, 1983, Time cover story. Time reported that Sharon had discussed revenge with the family of Lebanon's assassinated Christian president-elect the day before Christian militiamen massacred hundreds of Palestinian refugees at two camps in Beirut.

Today's finding prompted Sharon's lead lawyer, Milton S. Gould, to declare victory in the case, a claim Sharon had been making, much to Gould's chagrin and warnings, even before deliberations began.

"No longer are we involved in establishing true principles of honesty," Gould said. "From my point of view, what happens from here on involves only money."

Time managing editor Ray Cave reiterated that Time would make no effort to settle the $50 million suit and plans to appeal if the jury finds for Sharon on the two remaining questions.

"We're confident that the story is true," Cave said.

Then, in a clear reference to Sharon, he added, "Not a single human being but one in a position to know has come forward to say the story is wrong."

Cave said he had faith in the article's accuracy because it was based on "highly placed" confidential sources of David Halevy, a Time Jerusalem correspondent. Cave, however, said he did not know the names of the sources and had made no effort to learn them, feeling that would be "at least a fractional violation of the confidentiality" Halevy had promised the sources.

The sequestered panel of two men and four women went back into the jury room for about two hours to discuss the "actual malice" issue before they retired for the evening. Judge Abraham D. Sofaer directed them to resume deliberations Saturday morning.

Sofaer's unusual procedure of having the jury report findings step by step has injected an air of suspense and tension throughout the bustling 30-story courthouse here.

Upstairs from the Sharon trial, where retired general William C. Westmoreland's $120 million libel case against CBS Inc. was completing its 14th week of testimony, U.S. Judge Pierre N. Leval cautioned jurors Thursday that the two libel cases have "absolutely" no connection.

Comparing them to two automobile accidents where different parties could be at fault, Leval told his jurors, before they left for the weekend: "That case is that case; this case is this case."

As is usual around courthouses when a jury stays out for any great length of time, lawyers, reporters and the parties involved are advancing a rash of theories to explain why deliberations are taking such a long time.

But today, after the jury announced its second finding, Sofaer seemed to make an effort to allay suspicions of a deep split among jurors.

Sofaer said there was "no indications whatsoever" from the observations of marshals guarding the jury room and from the notes jurors had sent him requesting evidence and working materials that they were either "low in morale" or experiencing "internal difficulties."

"They seem to be working in a very deliberate fashion," Sofaer said.

However, Time's Cave, apparently searching for a silver lining, said, "How the jury came to their conclusion, I have trouble understanding, but it took two days to get to that."

Later, when Cave completed comments to newspaper and magazine reporters, he went to the courthouse steps where the throngs of television reporters and cameramen shouted for him to read aloud a prepared Time news release that magazine spokesman Michael Luftman had handed out in the courtroom after the jury reported its finding.

Putting on glasses, Cave began, "Time is gratified . . . "

He stopped abruptly, adding, " . . . wrong statement."

Both he and the television people burst into laughter.

"We had to be ready," he explained. "Ever hopeful."

He then went on to read the negative release which said in part, "We believe we could have proven that the paragraph was substantially true had we been given adequate access to secret Israeli documents and testimony. We have the utmost confidence in our editorial staff and in our editorial procedures, which have been tested for more than 60 years. We continue to expect that the jury will find that Time did not libel Mr. Sharon."

Earlier, Sharon had stood in the same place, saying, "I would call it a very great moral victory. It showed very clearly that we spoke the truth and that Time magazine lied and that's what we have been saying many months."

When Sharon was asked how important, ultimately, was the matter of monetary damages, Gould cut off the questioner by telling Sharon, "Don't answer yet. I don't want you to talk about it."

Sharon had previously said the $50 million sought in the suit was not important to him and that he had asked for that figure only to have the case be taken seriously in court. Gould has told reporters that legal and other costs associated with the case reached $1 million before the trial began on Nov. 13.

Although both Sharon and Gould had indicated as late as early this week that they would settle the case out of court if Time agreed to a full retraction and apology, which the magazine resolutely declined to do, Gould said today there was no longer any possibility for settlement.

His voice, heavy with emotion, the veteran trial attorney and legal adviser for Jewish organizations said he had taken the case not only because of his outrage that Time had accused Sharon of conspiring in the massacre of Palestinians but also because the magazine report had seemed to indicate that the government of Israel had hidden this information in a conspiracy "to deceive the world."

An Israeli commission that investigated the massacre reported in February 1983 that Sharon bore "indirect responsibility" for the killings for failing to foresee they would occur when he sent emotionally stirred Lebanese Christian militiamen into the camps.