By EDITH M. LEDERER - Associated Press Writer

LONDON, October 3, (AP) - China and Britain, in a sign of improving relations, reached agreement Tuesday on several Hong Kong-related issues. But China reiterated it would scrap the colony's newly elected legislature.

Chinese Foreign Minister Qian Qichen and his British counterpart, Malcolm Rifkind, said after a two-hour meeting that they want "a smooth transition" from British to Chinese rule in Hong Kong in 1997.

Britain and China agreed to set up an expert group to ensure that the handover ceremonies on June 30, 1997 are "solemn and grand and decent," Rifkind said.

They also agreed on arrangements for contacts between senior Hong Kong civil servants and Chinese government officials, he said.

But Qian made it clear that China would oppose any request to maintain Hong Kong's elected Legislative Council after it assumes sovereignty.

Britain has urged China not to scrap the council, saying it would put at risk the international confidence on which the colony's prosperity and trade depend.

Speaking later in the day to the Royal Institute of International Affairs, Qian fielded a question from a member of the council, Christine Loh, who asked about reports that a Chinese-sponsored provisional legislature could be set up next year.

"In the run-up to July 1, 1997, the present Legislative Council will perform its mission," Qian said. "However, after the 30th of June 1997, this legislative council will no longer be there." In his speech to the institute, Qian reiterated "that China will not change its policy toward Hong Kong, and Hong Kong's long-term stability and prosperity will be fully guaranteed." He also said China will insure that "Hong Kong enjoys a high degree of autonomy and (will) be administered by the people of Hong Kong."

In the legislative elections on Sept. 17, Hong Kong's last under British rule, pro-democracy politicians swept to victory over pro-China rivals. China holds that the election is invalid because the rules were devised by Britain without Beijing's consent. Qian said a preparatory committee being formed by China to administer Hong Kong when it takes over in 1997 will start operating in January.

China and Britain agreed Tuesday that the Hong Kong government will establish a liaison office to maintain contact with the preparatory committee, Qian and Rifkind confirmed. The tone of the Rifkind-Qian meeting was upbeat. Qian is the most senior Chinese official to visit Britain in nearly three years. Beijing had vetoed high-ranking contacts to show its displeasure over democratic reforms introduced in Hong Kong by Governor Chris Patten. Before meeting Rifkind, Qian held talks with Prime Minister John Major.

Rifkind called his meeting "extremely important and very satisfactory," saying both countries were firmly committed to "very good progress both with regard to our bilateral relations and also to ensuring a smooth and successful transition for Hong Kong in 1997." Qian called the talks "positive, useful and productive" and said China was "pleased to see the improvement in Sino-British relations recently." On other subjects, Rifkind said he raised the issue of human rights in China with Qian but gave no details. He said both sides had agreed to open new consulates, and Britain wants its consulate to be in the southern Chinese city of Guangzhou.

Qian said Britain reiterated its support for Beijing as the sole representative of China and said it did not recognize any Tibetan government-in-exile.