BAGHDAD, IRAQ, MAY 29 -- Moderate leaders at the Arab summit appeared today to have persuaded hard-liners to take a "balanced and prudent" approach to the United States, under fire for its support of Israel, conference sources said.

The sources said that as the heads of state met for a second day today, Iraqi President Saddam Hussein and King Hussein of Jordan, who have favored a tough anti-U.S. line, agreed to take a more moderate approach. They did not say what prompted the change.

"President Saddam has switched to a balanced and prudent approach that will placate hard-liners and satisfy the moderates," one top Persian Gulf official said. "It's now up to the United States to accord the Arabs due respect and handle the Middle East more maturely and constructively."

The conference was called as a show of Arab unity against what Saddam Hussein has said is a Western and Israeli campaign against Iraq. It was also to seek ways to stem the large-scale immigration of Soviet Jews to Israel, which Israeli Interior Minister Yitzhak Peretz was quoted today as saying is expected to number 250,000 this year.

As the Arab leaders resumed talks behind closed doors in Baghdad's heavily guarded conference center today, sources said they were to complete a memorandum on issues related to the Arab-Israeli conflict to be sent to the U.S.-Soviet summit, opening in Washington on Thursday. But after the meeting, Iraqi Foreign Minister Tariq Aziz told reporters that the leaders had canceled plans to send the memo. He would not elaborate.

Hard-liners such as Libyan leader Moammar Gadhafi were keeping a low profile, sources said. Syria and Lebanon have boycotted the summit, while Morocco, Algeria and Oman sent lower-ranking officials. The turnout was seen as a clear sign of discord between hard-liners and the moderates over how tough a line they should take against the United States.

Sources said Arab leaders were incensed by a 16-page State Department note sent to the 21-member Arab League last week urging Iraq to "moderate both its action and its rhetoric" and advising the heads of state to avoid "excessively ardent language." It also called on the Arabs to recognize Israel and uphold the right of Soviet Jews to immigrate to Israel if they want.

In another development today, a senior PLO official said Saddam Hussein and President Hashemi Rafsanjani of Iran could meet in the next few weeks to formally end the Persian Gulf war, which was halted by a cease-fire in 1988.