Iran and Iraq swapped 50 wounded POWs in a mostly symbolic gesture on the eve of a new round of peace talks, but U.N. Secretary General Javier Perez de Cuellar warned the "situation is fragile" despite a two-month cease-fire in the Persian Gulf war.

Perez de Cuellar was scheduled to meet Monday with negotiators from both countries as Iran and Iraq return to Geneva for a third round of talks since the Aug. 20 cease-fire.The last round of negotiations, which took place earlier this month in New York, ended with both sides bitterly divided over ownership of the Shatt al Arab, a waterway that runs along the border between the two countries.

The Iraqi delegation has said it will refuse to agree to further prisoner of war exchanges or troop withdrawals until Iran recognizes Baghdad's claim to sovereignty over the Shatt. Tehran insists the territorial border runs down the middle of the waterway.

"Despite the cease-fire the situation is fragile," Perez de Cuellar said after arriving in Geneva on Sunday. "It is not my problem, it is their problem."

Perez de Cuellar said priority should go to speedy repatriation of the tens of thousands of POWs - said to number between 70,000 and 100,000.

The exchange of wounded POWs was carried out Sunday by the International Committee of the Red Cross, which flew 25 Iranians to Tehran and 25 Iraqis to Baghdad.

Perez de Cuellar said he would meet Monday with ICRC President Cornelio Sommaruga to discuss how repatriation of the remaining POWs could be carried out once an agreement is reached.

Iran and Iraq began peace talks in Geneva on Aug. 25, five days after the cease-fire went into effect. The first round ended Sept. 13 in a deadlock, as did the second session in New York.

The major stumbling block remained Iraq's demand that Iran remove sunken ships, mines and other war debris from the Shatt al Arab, its only outlet to the Persian Gulf.