Flurry of Diplomacy in Tokyo. HIROHITO FUNERAL

IN meetings here with Middle East leaders, United States President George Bush yesterday downplayed the recent Soviet initiative to convene an international peace conference. While agreeing that there are new opportunities for pushing the Middle Eastern peace process forward, US officials stressed the importance of direct talks between Israel and the Palestinians.

``It is only direct negotiations between the parties that are going to lead to permanent peace in the Middle East,'' Secretary of State James Baker III told reporters.

President Bush met Thursday with Egyptian President Hosni Mubarak, Jordan's King Hussein, and Israeli President Chaim Herzog - all of whom are here to attend the funeral of the Japan's late Emperor, Hirohito.

Soviet Foreign Minister, Eduard Shevardnadze has just ended talks in Cairo with Arab and Israeli officials. He pushed for an international conference in which the major world powers would guarantee a settlement between Israel and the Arabs.

Mr. Baker suggested Soviet influence on its Syrian ally, full recognition of Israel, and cessation of support for ``radical countries such as Libya'' would demonstrate Moscow's commitment.

The US's diplomacy at the funeral of Japan's Emperor also focused yesterday on relations with Japan and Western Europe.

Bush and Prime Minister Noboru Takeshita discussed cooperation on global problems such as third-world debt and the environment. They reportedly did not, however, discuss potentially contentious issues such as trade and defense cooperation.

Bush's visit is welcomed here as an important gesture of US support for the alliance with Japan. The President said he was coming ``to convey the grief and respect'' of the American people. Emperor Hirohito (now renamed Emperor Showa after his reign) ruled for 62 years, until his death Jan. 7. His funeral, which has attracted delegations from 158 countries, has been an opportunity for Japan to display its widening role in world affairs.

Mr. Takeshita briefed Bush on a new $1 billion plus loan package for debt-strapped Brazil, unveiled at an earlier meeting Thursday with Brazilian President Jos'e Sarney. The deal follows Japan's decision to reschedule about $2 billion in Brazilian debt.

Takeshita said this initiative is part of Japan's plan to extend help to developing countries beyond its traditional partners in Asia, a Foreign Ministry official said. Foreign Minister Sosuke Uno met with nine Latin American foreign ministers and told them of plans for expanded aid.

The two leaders also reaffirmed their intention to implement a joint aid plan for the Philippines, identified as a key area of US-Japan cooperation.

The US has been pushing such a larger Japanese role, particularly in helping to solve the economic problems of developing nations. But it has been cool to a 1988 Japanese proposal to combine debt relief and new funding for ``middle-income'' nations in exchange for economic reforms.

The debt issue is likely to figure prominently at the annual economic summit of Western leaders this July in Paris. At a meeting with Bush Thursday, French President Fran,cois Mitterrand explained the French proposal for extending new credits to developing countries. Secretary Baker, indicating continued US opposition to that plan, told the French leader that the US remains committed to a ``case by case'' approach to debt relief.

Global environmental problems, including deforestation, drought, and the ``greenhouse effect'' were also discussed, as were relations with the Soviet Union.