Ariel Sharon suffered a setback today in a New York courtroom, but well before the jury in his libel trial against Time magazine delivered its last verdict in the case there was a consensus here that Sharon already had won the larger political and public relations battle against his critics.

What was not immediately clear, and what is likely to take weeks to sort out, is how much of a boost the case of Sharon vs. Time will give the former defense minister in his ambition to become Israel's prime minister.

In ruling that Time had not acted with malice or "reckless disregard for the truth" by publishing an erroneous paragraph about Sharon, the jury denied Sharon any of the $50 million in damages he was seeking in the case. But it has long been recognized here that the money was the least of the stakes involved in a case that has captured widespread public attention in Israel and is likely to be the subject of intense discussion in the days to come.

The assumption here has been that Sharon, by earlier convincing an American jury that the Time paragraph was both erroneous and defamatory, will now claim that those rulings vindicate his conduct as Israel's defense minister during the war in Lebanon. But the actual political fallout and presumed benefit to Sharon from the case is much more difficult to gauge immediately.

Sharon is already the most divisive public figure in Israel. The Time case is likely to harden the positions of each side, boosting the ardor of his supporters and the fear and hatred of his enemies. For Sharon, the most important question is the impact of the case among members of his own political party, the leadership of which he must capture if he is to be prime minister someday.

Yuval Neeman, a former Cabinet minister and leader of the Tehiya Party, was quoted by Associated Press as saying the verdict helps remove the accusation that Israel was guilty of the massacres.

Sharon, now minister of industry and trade in Israel's national-unity government, went into the New York courtroom with his own personal and political agenda. He portrayed himself as defending Israel as well as himself against charges of responsibility for the 1982 massacre of Palestinian refugees in the Sabra and Shatila refugee camps of west Beirut.

An Israeli government commission that investigated the massacre found that Israel bore "indirect responsibility" for the slaughter, and it called for Sharon's ouster as defense minister. He was removed from that post in February 1983 but was allowed to remain in the Cabinet.

As part of a determined effort toward personal vindication and political rehabilitation, Sharon seized on a single paragraph in Time's Feb. 21, 1983, cover story on the findings of the Israeli investigative commission. The paragraph reported that a secret appendix of the commission's report contained references to a conversation between Sharon and the family of Bashir Gemayel, the president-elect of Lebanon whose assassination immediately preceded the massacre, in which Sharon discussed the need to take "revenge."

Confident that the magazine was wrong about the content of the secret appendix, Sharon went to court in New York with at least one eye on political and public opinion at home.

On those fronts, it is widely assumed here, Sharon already had won when the jury, in its two earlier verdicts, ruled that the Time article "defamed" him and was erroneous. The failure of Sharon to win on the last point and collect damages, in this view, can be blamed on the extremely demanding standards of U.S. libel law, which require a public figure to prove that defamatory information was published with malice or reckless disregard for the truth.

On Monday, after the first two verdicts were in, The Jerusalem Post reported that Sharon was assured of "a hero's welcome" on his return to Israel. Quoting "Sharon admirers" within his political party, Herut, the newspaper reported:

"Sharon will be presented as the man who finally gave the lie to Israel's media enemies abroad and saved Israel's honor. He will be met at the airport by supporters planning to greet him in much the same manner as victorious sports teams are saluted. There will be placards, flowers, singing and dancing, organizers promise."

The newspaper added that a congratulatory telegram to Sharon from former prime minister Menachem Begin after the first of the jury verdicts had given added impetus to plans for Sharon's welcome. Begin often has been portrayed by his own defenders as a man who was misled by Sharon during the war in Lebanon, and destroyed, physically and emotionally, by the results of the war and the Sabra and Shatila massacres. But Begin's telegram was a sort of certification of honor from the founder of the Herut Party.

Before the last verdict was rendered, opinions among Sharon's government colleagues about the likely effect of the case were divided. Gideon Patt, the minister of science and development and a member of the Likud bloc political faction to which Sharon also belongs, said he was pleased by the first two verdicts. The case might strengthen Sharon in his own party, Patt said, but that is hardly necessary because Sharon already is so strong.

Amnon Rubinstein, the communications minister, leader of the left-of-center Shinui Party and a fierce Sharon critic, said the case of Sharon vs. Time is irrelevant to Israel's real concerns. The real issues, he said, are the quality of Israeli democracy and whether government ministers are to be held accountable for their decisions and actions.

Regardless of the opinions of six New Yorkers, Rubinstein said, "For me, he can't come back as a hero."