LOD, Israel (AP) _ Pan Am, British Airways and KLM Royal Dutch Airlines on Thursday announced cutbacks or suspensions of flights to Israel, citing reduced tourism and higher insurance costs due to fears of war in the region.

The cancellations came as Israeli leaders renewed warnings to Iraq not to attack Israel and Israel television reported a new development in possible negotiations between the United States and Iraq

Israel TV said Iraq's deputy foreign minister, Nizar Hamdoun, told European Community leaders that Iraq may consider ceasing its state of belligerency with Israel during negotiations with the United States over Kuwait.

It quoted unidentified Washington sources and said the report had not been confirmed by any other source.

On Thursday, Defense Minister Moshe Arens warned Iraq that Israel's response to an Iraqi attack would not be ''low profile.'' He told worried Israelis in the north that the chance of Iraq attacking was ''very small and the Iraq capability to do significant damage with their missiles is limited.''

Arens added that he thought the mass of forces deployed in the Persian Gulf could compel Iraq to accept a political solution.

''I think Saddam Hussein is aware he is up against a very large military buildup that is capable of causing great destruction to his military,'' Arens said on Israel TV.

''I assume and hope ... he will prefer to go toward a political solution.''

Housing Minister Ariel Sharon, a reserve general who was defense minister during Israel's Lebanon war, said Israel would respond in ''the harshest way'' to any attack.

He told reporters during a tour of building sites, ''Israel will not allow its citizens to be harmed.''

Pan Am said Thursday it was suspending all flights to Israel for at least a week. British Airways and KLM said they were reducing the number of flights.

British Airways and Swissair also changed flight plans so crews could avoid an overnight stay in Israel, Israel radio reported.

A senior official at Ben-Gurion International Airport in Lod, speaking on condition of anonymity, said he feared other airlines would take similar steps.

''We are afraid this is only the beginning. As we get closer to Jan. 15 more and more airlines will be affected,'' he said, referring to the U.N. deadline for Iraq to withdraw from Kuwait or face possible military action.

Danny Danziger, Pan Am's director in Israel, told reporters the company called off flights to Israel because of a sudden steep increase in insurance rates from $3,500 to $65,000 a flight.

Spokesmen for other airlines cited a drastic drop in tourism to Israel in recent months, due to the gulf crisis and persistent violence in the Israeli- occupied territories.

Richard Lucente, British Airways general manager for Italy and the eastern Mediterranean, said the airline decided to cut back from six to four flights a week because of a decrease in reservations, particularly from Britain.

He said passenger traffic from Britain to Israel had dropped 50 percent recently, and that the reduced schedule would be in force at least through February.

KLM officials also said flights would be reduced from four to three weekly for the next few weeks.

The Israeli Transport Ministry published a statement saying it was ''sorry and astonished'' by the flight reductions, adding they were unjustified.

Israel's national El Al Airlines was ordered to accommodate passengers or tourists affected by the cuts.

The cuts were not expected to have any immediate impact on a huge influx of Soviet immigrants, who fly in from eastern Europe on other airlines, airport officials said.