French President Francois Mitterrand, in his first face-to-face meeting with President Reagan since U.S. warplanes were denied permission to fly over France on the way to bombing Libya, acknowledged today that the decision had "created a state of shock" in the United States and a "difficult situation" in relations between the two countries.

Mitterrand explained to Reagan that France's refusal was based on its insistence on "respect for national sovereignty," according to a particpant in the meeting.

But Mitterrand also said France would serve in the "front ranks" of the fight against international terrorism, White House spokesman Larry Speakes announced. Speaking of Libyan leader Muammar Qaddafi, Mitterrand said, "We should isolate the leader, but not the people."

Reagan's meetings with the allied leaders here were the first since the April 15 U.S. bombing of Libya, which drew criticism or silence from the allies, except for Britain and Canada. But West German and French officials said today the criticism appears to have dissipated, and the three-day economic summit concluded with the allied leaders publicly pledging support for the fight against terrorism.

"We have moved beyond condemnation to concrete steps," Mitterrand told Reagan, Speakes said.

[Libya's official radio, in a commentary monitored in Nicosia, Cyprus, rejected the summit's charges of terrorism and said the meeting had failed because "the Japanese people decided to liberate Tokyo, forcing the heads of state attending the summit to flee from Japan like lizards," The Associated Press reported. This was an apparent reference to rockets fired Sunday toward the leaders' meeting place by Japanese leftists.]

The French president, joined by Prime Minister Jacques Chirac, was the first to bring up in conversation France's refusal to allow the U.S. overflights in the Libyan raid, Speakes said. As a result, American F111 bombers based in Great Britian had to fly an additional 1,200 miles around France to reach their targets in Libya.

"There has been a difficult situation between your country and ours," Mitterrand told Reagan. "There has been a divergence, but we have to place that in context of 200 years of history. We did not set out 200 years ago to agree on everything, but we have succeeded in agreeing on the most important issues . . . . Our friendship is our mainstay. We do not wish to settle into a crisis situation with the United States."

Reagan responded, "In every happy marriage, there are disagreements, but the marriage continues," Speakes said. When reporters asked Reagan in shouted questions whether he was still irritated at France, he shot back, "That's a very tactless question."

The meeting at the residence of U.S. Ambassador to Japan Mike Mansfield represented an unusual attempt at reconciliation between two leaders who have often been at odds at previous economic summit meetings.

Other allied leaders echoed Mitterrand's vows to resist terrorists and promised to support Reagan's campaign to isolate Qaddafi, although some voiced reservations about interpretations of yesterday's agreement pledging more forceful measures to combat terrorism.

Japanese Prime Minister Yasuhiro Nakasone, traditionally reluctant to criticize Arab nations, said he had come to a better understanding of the U.S. case against Libya. He noted, however, that the singling out of Libya in yesterday's statement did not represent a change in Japan's Mideast policy.

British Prime Minister Margaret Thatcher, who took the lead in private summit sessions in arguing for a strong statement on terrorism that specifically identified Libya, said today that Libya is so clearly involved "in state-sponsored terrorism that it stands out above all others for the clarity of its intentions."

Although Thatcher has lost ground in opinion polls at home for allowing U.S. warplanes to use British bases for a bombing raid against Libya, she showed no signs of softening her attitude toward Qaddafi. She said Qaddafi "pursues terrorism as the head of state of Libya as a political weapon and that is a form of tyranny against innocent people that is totally unacceptable." Thatcher said the restrictive measures adopted by the seven summit leaders applied only to Libya for now, but could be expanded, if warranted, for other nations.

In answer to a question, she said she did not believe that the United States viewed yesterday's summit statement as carte blanche for new military action against Libya.

Canadian Prime Minister Brian Mulroney, who had supported Thatcher's push for a stronger summit statement, said today the nations are seeking to "apply a full-court press against Libya."

Mitterrand said at a news conference that he supported the decision to identify Libya as a source of state-sponsored terrorism in the summit statement.

"This was designed to inform certain people that there is mined territory that they would be well advised not to tread upon," he said.

Italian Prime Minister Bettino Craxi, whose country is Libya's largest trading partner, expressed a desire for less political turbulence on the subject. Asked at a news conference about reports that the United States planned another strike against Libya, Craxi replied: "We have already agreed at this summit that there will be continuing consultations on this matter. So if another such strike is planned, it would violate our current agreement."

Reagan and Mulroney, reportedly by mutual consent, called off their bilateral discussions planned for this morning, making Mulroney the only national leader with whom Reagan did not meet personally. Aides said they had spent ample time with each other yesterday.