Iran and Iraq resumed peace talks Saturday, and Secretary-General Javier Perez de Cuellar offered new proposals to break a stalemate over navigation rights, a senior European diplomat said.

The talks lasted about four hours and concluded at about 10 p.m. There was no word on when negotiations would resume.Iraqi Foreign Minister Tariq Aziz had no comment upon his departure, saying he would let the secretary-general summarize the talks. He said he would comment later if Iran did.

The talks opened with the Iranian and Iraqi delegations seated in one room, but shifted to indirect talks after reporters left. Iran's Foreign Minister Ali Akbar Velayati headed his country's delegation.

"They looked happy. It seems to be going well," a source close to the talks, speaking on condition of anonymity, said after the negotiations got underway.

The Iranians and Iraqis were in separate rooms and Perez de Cuellar shuttled between them with proposals and counterproposals.

Aziz and Velyati met separately Friday evening with Perez de Cuellar and his special mediator, Swedish U.N. Ambassador Jan K. Eliasson.

The major issue separating the two sides is the Shatt-al-Arab waterway, which forms the nations' southern border.

When talks broke off Sept. 13 in Geneva, Iraq was insisting that the Shatt-al-Arab be cleared of sunken ships and silt to be made navigable again. The waterway is Iraq's only outlet to the Persian Gulf.

Iraq also wanted Iran to cease halting neutral ships in the gulf to inspect them for Iraq-bound war cargo.

The Geneva talks opened Aug. 25, five days after a truce in the 8-year-old Iran-Iraq war began.

Perez de Cuellar has advanced new proposals to break the stalemate, said Greek Foreign Minister Karolos Papoulis, chairman of the Council of Foreign Ministers of the 12 European Community nations.

"Efforts have been undertaken on the part of the secretary-general to resolve the deadlock that has evolved in that area, and always there is hope that the deadlock will be overcome," Papoulias said Friday after meeting Aziz and Velayati.

"After so many years of war, the issues cannot be overcome from one day to another," he said.

Velayati told reporters: "We do hope that during these talks that are taking place in New York, we could reach a tangible result, and we hope that we could reach a concrete conclusion for the implementation of the other provisions of Resolution 598."