Secretary of State George Shultz held talks with Syrian President Hafez Assad Monday on nine American hostages held in Lebanon and prospects for peace in the Middle East.

On the last full day of his fourth Middle East peace mission this year, Shultz made a four-hour scheduled stop in Damascus to meet Assad.Shultz will leave the Middle East Tuesday to attend a conference of the North Atlantic Treaty Organization in Madrid.

Aides to Shultz said the American hostages in Beirut were high on the agenda of the talks with Assad. But they cautioned that the hostage situation was not the sole reason for Shultz's trip to Damascus and that they did not expect an immediate release of the Americans.

Hopes had risen recently that some hostages might be rescued following the advance into the southern suburbs of Beirut by the Syrian Army, which is playing a peacekeeping role in the embattled country.

The Syrians moved in to halt fighting between two rival Shiite Moslem groups - the Syrian-backed Amal militia and the pro-Iranian Hezbollah.

The Americans and other Western hostages are believed to be held in the southern suburbs of Beirut by Hezbollah.

Assad has been the least receptive of any Arab leader to Shultz's peace plan that calls for direct Arab-Israeli talks to settle the Palestinian issue.

Assad's opposition may be academic. Shultz said Sunday night he had failed to persuade the two key players - Israel and Jordan - to change their opposition.