TRADE TALKS IN THE PACIFIC : Rights Issues Take Stage at Summit : Asia: Protests over East Timor embarrass Indonesia, which had hoped to polish image.

Human rights intruded into the summit of Asian leaders Monday with scores of demonstrators arrested in the disputed territory of East Timor and President Clinton interceding for students holding a protest in the U.S. Embassy compound here.

About 600 people were reported to have rioted Monday at the university in East Timor, throwing stones at police after a scuffle between a student and a street vendor.

The violence marked the third day of unrest in East Timor, 1,200 miles east of Jakarta. A former Portuguese colony, the territory was annexed by Indonesia in 1975 and has been the scene of frequent ethnic violence between Roman Catholic Timorese and predominantly Muslim Indonesian settlers and soldiers.

News agency reports from Dili, the capital of Timor, quoted authorities as saying that more than 80 people were arrested in the rioting, in which stores were burned and car windows were smashed.

“They have been burning and throwing stones,” Police Chief Sukianto Andreas said of the students. “These are criminal activities. We have arrested them because of these activities and we will charge them in court.”

The city was nearly deserted Monday, with most schools and shops closed.

Demonstrations over the weekend were timed to coincide with the third anniversary of a shooting incident at a Dili cemetery where Indonesian troops killed an estimated 200 people during a funeral procession.

This weekend’s violence deeply embarrassed the Indonesian government, which was hoping that the summit meeting of the 18-nation Asia-Pacific Economic Cooperation forum would help embellish its image. Instead, thousands of journalists attending the conference have given the human rights problem more coverage than ever before.

Clinton told reporters the United States had been assured that Indonesian authorities would not seek retribution against 29 students who scaled a fence at the U.S. Embassy on Saturday and have been holding a sit-in since then.

The students have told reporters that they want to meet with Clinton or Secretary of State Warren Christopher to press their demands for the release of Timorese guerrilla leader Jose (Xanana) Gusmao, who is serving a 20-year prison sentence for his separatist activities.

Clinton said the United States “had no problem with these young people coming and expressing their views in our embassy grounds, and we’ve talked with them and worked with them.”

The embassy has been providing the students with food, water and medical care.

Clinton sought reassurance from the Indonesians after the students complained that Indonesian military intelligence has threatened their safety. A number of the students, looking tired and bedraggled, indicated they will call off the demonstration if they receive assurances that they will not be harmed.

“This is just a small problem,” Indonesian State Secretary Murdiono, a close aide to President Suharto, told reporters.

But the Portuguese press agency reported that the students at the U.S. Embassy want political asylum in Portugal.

“We want to go to Portugal because according to international law we are Portuguese,” student leader Domingos Sarmento Alves told the agency.

A number of Timorese who were arrested during demonstrations last year were eventually allowed to leave for Portugal.

Clinton also raised human rights issues Monday in a meeting with Chinese President Jiang Zemin, but there apparently was no agreement. A Chinese spokesman said Jiang stressed the differences in the two systems. “China needs stability, without which its recent gains will be lost,” the spokesman said.

Earlier this year, Clinton announced that the United States would no longer link most-favored-nation trade status for the Chinese with rights record, after it became clear that the Chinese were prepared to suffer a trade war rather than appear to capitulate.

Although human rights are not on the agenda at the APEC summit talks, Clinton has promised to raise the issue in bilateral meetings with Asian leaders.