CRISIS IN THE PERSIAN GULF : Gorbachev, Mitterrand Open Talks : Diplomacy: Paris summit brings together two leading proponents of a diplomatic solution to the gulf crisis.

Soviet President Mikhail S. Gorbachev and French President Francois Mitterrand, key players in the search for a diplomatic solution to the Persian Gulf crisis, Sunday opened two days of talks likely to be dominated by gulf issues.

The Soviet and French leaders met briefly Sunday afternoon and then dined together at the Elysee Palace amid rumors that Mitterrand had received a letter from Iraqi President Saddam Hussein outlining a new peace proposal. But at a press conference in Rome, where he was attending a summit of European leaders earlier in the day Sunday, Mitterrand denied having any contact with Iraqi officials.

The Franco-Soviet summit takes place in an atmosphere of intense activity on the gulf front by both countries. A recent host of rumors and official statements seemed to highlight the significance of the talks between two leaders who are evidently regarded by Iraqi President Saddam Hussein as his best hopes for a diplomatic and unhumiliating solution to the crisis.

Gorbachev raised some expectations for a diplomatic settlement when he told a news conference Saturday in Madrid that he detected a softening of official Iraqi attitudes, and the Soviets then asked the U.N. Security Council for a 48-hour postponement of a vote on a resolution condemning Iraq so that Soviet special envoy Yevgeny Primakov could complete talks with Hussein in Baghdad.

Meanwhile, France has recently received a flurry of offerings from Iraq, topped by a decision last week by Hussein to release all of France’s more than 300 hostages in Iraq, including those held at strategic centers. French officials say the hostages are to fly to France today.

The gulf crisis is likely to dwarf what was supposed to have been the main subject of the talks here, a treaty of understanding and cooperation between France and the Soviet Union.

The agreement will be signed by Gorbachev and Mitterrand today after they meet for talks at a 14th-Century former royal castle at Rambouillet, 30 miles west of Paris.

Gorbachev flew here from Spain, where he ended his official visit Sunday with Olympic and Picasso sightseeing in Barcelona.

He and his wife, Raisa, toured the refurbished stadium on Montjuich hill overlooking the city that will be used for the track events at the 1992 Olympics. As they entered the stadium, the scoreboard lighted up with the words “Welcome to Barcelona” in both Russian and Catalan, the language of this region of Spain.

Among those who greeted them were Juan Antonio Samaranch, the Barcelona-born president of the International Olympic Committee.

The Gorbachevs also visited the new Saint Jordi Palace nearby that will be used for basketball and other indoor sports in the Olympics, and the well-known Picasso museum housed in a 14th-Century palace in the narrow streets of the oldest part of the city. Pablo Picasso studied art as a teen-ager in Barcelona at the turn of the century before leaving for Paris, and the museum has a unique collection of the Spanish painter’s early work.

Prince Felipe, the heir to the Spanish throne, was host for the Gorbachevs’ visit to Barcelona largely because the area’s two main political rivals--Socialist Mayor Pasqual Maragall of Barcelona and Jordi Pujol, the Catalan nationalist who is president of the Generalitat or government of the region of Catalonia--could not agree on how to divide the honors. But, though the prince was the official host, Maragall and Pujol seemed to bob up on television screens somewhere near the Gorbachevs all the time.

With the fringes of hair around his baldness often unkempt, his face puffy and his eyes tired, Gorbachev frequently looked somewhat weary on his three-day visit to Spain. But when a television reporter, closing an interview late Saturday night, told him, “I will let you go to sleep now,” Gorbachev shook his head and replied with a smile, “I am not sleeping until I have completed perestroika in the Soviet Union.”

Tempest reported from Paris and Meisler from Barcelona.