Forty-four senators asked Attorney General Edwin Meese III yesterday to consider indictment of Palestine Liberation Organization chairman Yasser Arafat for the murders of two U.S. diplomats on May 2, 1973.

However, senior Justice Department officials have tentatively concluded no prosecution should be brought because the United States does not have legal jurisdiction to indict Arafat in the case, according to department sources. They said no final decision has been made.

According to a letter to Meese from Sens. Frank R. Lautenberg (D-N.J.) and Charles E. Grassley (R-Iowa), evidence collected by the Justice Department indicates that Arafat may have ordered the killings of Cleo Noel, U.S. ambassador to the Sudan, and Charge d'Affaires G. Curtis Moore.

The department's criminal division has been examining charges that Arafat ordered the assassinations. Some Jewish organizations have urged an indictment.

But department sources said officials have concluded that the United States probably lacks legal authority to indict Arafat for acts committed in another country. While laws passed over the last decade have increased the department's authority to prosecute terrorist killings of Americans abroad, the sources said, officials determined that they could not apply those laws retroactively to the 1973 murders.

Noel, Moore and Belgian diplomat Guy Eid were shot to death by eight terrorists who seized the Saudi Arabian Embassy in the Sudanese capital, Khartoum. The terrorists, calling for release of Robert F. Kennedy's killer, Sirhan Sirhan, later surrendered and were identified as members of Black September, a PLO fringe group.

In a letter signed by 42 colleagues, Lautenberg and Grassley cited newspaper reports alleging that Arafat was in the Black September radio command center in Beirut when the killings were ordered. Although the senators said it remains unclear whether Arafat instructed the terrorists by radio, the newspaper reports said he offered congratulations after the executions.

The senators also cited reports that U.S. officials have a copy of a tape recording in which Arafat or someone in the PLO command post ordered the murders by radio. "These allegations, if substantiated, leave little doubt that a warrant for Arafat's arrest should be issued," they said.

But department sources said officials there have been unable to confirm the tape's existence.