British author Salman Rushdie apologized Saturday for causing distress to Moslems with his novel "The Satanic Verses," but the apology did not appear to win him a reprieve from a death order.

Iran said Saturday afternoon that the apology had earned Rushdie a pardon from the order by Iranian leader Ayatollah Ruhollah Khomeini.The official Iranian news agency IRNA said his statement, "though far too short of a repentance, is generally seen as sufficient enough to warrant his pardon by the masses in Iran and elsewhere in the world."

But an hour later, IRNA retracted the report, saying the comment was a "personal observation" by one of its writers and "does not allow for any specific interpretation whatsoever."

The retraction apparently left Rushdie, under armed police guard in Britain, still under the threat of death.

The 41-year-old author, born a Moslem in Bombay, went into hiding Tuesday when Khomeini ordered Moslems around the world to kill him for blaspheming against the prophet Mohammed.

Iranian clergymen placed a $6 million bounty on his head.

But Iranian President Ali Khamenei, trying to calm the international furor caused by the death order, said Friday that Rushdie could win a reprieve if he apologized to Moslems and repented.

"He may repent and say `I made a blunder' and apologize to Moslems. Then it is possible that the people may pardon him," Khamenei told a prayer meeting in Tehran.

Rushdie, 41, said earlier that his novel, a surrealistic account of a battle between good and evil, was not meant as an insult to Moslems.

And in a statement issued through his agent Saturday, Rushdie said: "I profoundly regret the distress that publication has occasioned to sincere followers of Islam.

"I recognize that Moslems in many parts of the world are genuinely distressed by the publication of my novel.

"Living as we do in a world of many faiths, this experience has served to remind us that we must all be conscious of the sensibilities of others," he said.

Iran immediately replied that the apology did not go far enough because it "made no indication of his repentance or that his slanderous book would be withdrawn."

Rushdie "had been under growing pressure to make a public repentance that his statement is seen falling well short of," it added.

Iran's ambassador to Britain, Mohammad Basti, said Friday that Khomeini's order to kill Rushdie was a purely religious statement and was not interference in Britain's internal affairs. IRNA repeated the same line Saturday.

The Iranian daily newspaper Ettela'at criticized the bounty, saying killing for money was "typical of the dealings of the underworld and not of the saints or religious men."

IRNA issued the paper's comment, saying in the last paragraph of its report that Rushdie was generally seen to have done enough to earn a pardon.

Rushdie's statement followed hours of meetings between the novelist and his publishers, Viking Penguin, who had also received death threats shortly after publication of the book five months ago.

The uproar prompted three major U.S. book chains, Waldenbooks, B. Dalton and Barnes & Noble, to remove it from their shelves. The chains account for 20 to 30 percent of U.S. book sales.

In addition, Rushdie's novelist wife, Marianne Wiggins, canceled a U.S. tour set for next week to promote one of her books. Rushdie earlier in the week canceled his own U.S. promotional tour.

Booksellers in Rome reported a brisk trade in the Italian translation of the novel Saturday, with many selling out within a few hours of it going on sale.

The book went on sale in some shops Friday night and was generally available Saturday. Many bookshops were patrolled by police and turned prospective buyers away empty-handed, promising new supplies next week.

The British government had made clear its displeasure over Khomeini's order but adopted a low-key response because of fears for three of its nationals held hostage by pro-Iranian groups in Lebanon.

The Foreign Office said Wednesday that it was freezing plans to increase its embassy staff in Tehran but stopped short of breaking relations which were restored to full diplomatic status only three months ago.

France Saturday postponed the return of its ambassador to Iran and indicated it would consult with its European allies on a joint response to the death threats against Rushdie.

The diplomatic move by Paris followed West Germany's decision Thursday to recall its charge d'affaires from Iran after Khomeini ordered Rushdie's death.

A French Foreign Ministry spokesman said the ambassador, Christian Graeff, was currently in Paris and had been scheduled to return to his Tehran post Sunday.