NICOSIA, CYPRUS — When the United Nations made an announcement on Oct. 20 predicting the release of American hostage Jesse Turner, it was an indication that the UN's effort to win freedom for captives in the Middle East is still intact."This statement was the clearest possible signal to all the parties involved that after a number of sticky periods, things were back on track," said a Western diplomat in Beirut. Israel's chief negotiator on the issue, Uri Lubrani, even speculated on when the release process might be completed. "I am talking about a hope," he said, "that Christmas may be a good time frame to have all this ended." Mr. Turner, a lecturer at Beirut University College abducted in January 1987, was released by his captors at some point during the night of Oct. 21. His pro-Iranian kidnappers, calling themselves Islamic Jihad for the Liberation of Palestine, also hold another lecturer, Alann Steen, who remains in captivity. Other pro-Iranian groups are known to be holding four Americans, one Briton, and two Germans. Turner's freedom followed the release of 14 prisoners from the al-Khiam prison in southern Lebanon, which is controlled by an Israeli client militia, and the release of a Shiite held in central Israel. On Oct. 20 Israel had received conclusive evidence of the death of one its servicemen missing in Lebanon. The first breakthrough in attempts to end the long-running hostage and prisoner saga in the Middle East came with the release last August of British hostage John McCarthy, according to Western diplomats in Beirut. Mr. McCarthy brought with him a letter from his kidnappers addressed to UN Secretary-General Javier Perez de Cuellar, asking him to use his good offices to secure an overall release of Western hostages and the 350 or so Shiite Lebanese held by Israel or its client militia in southern Lebanon. Since then the secretary-general's envoy, Italian diplomat Giandomenico Picco, "has been working quietly but steadily behind the scenes building up trust," a Western diplomat in Beirut close to the hostage negotiations said. "It's taken time, because every group involved has needed time to evaluate information and promises made to it. They are now finding that Mr. Picco is indeed an honest broker." Such sentiments are also evident in recent statements issued by the kidnappers. For example, the Islamic Jihad - just before Turner's release - spoke of its "readiness to continue complying with the comprehensive agreement that is in process to release all the detainees and all the hostages." Turner dropped out of sight for several hours after he was freed. Then the next morning, Oct. 22, the former hostage was handed over to United States diplomats in Damascus and later flown to Weisbaden, Germany. The reason for the delay between his release and his appearance in Damascus isn't known. But an outbreak of heavy fighting between Shiite Muslim groups in the Bekaa Valley on Oct. 21 may have led UN officials to delay the drive to Damascus until dawn. There were also suggestions that a flare-up of violence in southern Lebanon involving the pro-Iranian Hizbullah (Party of God) organization and the Israeli Army might have delayed Turner's release. Even as an announcement about his freedom was awaited, another pro-Iranian group warned that renewed Israeli military action could obstruct the release of more hostages. Hizbullah said Oct. 20 its men were responsible for planting a roadside bomb in the Israeli-imposed security zone in southern Lebanon. Three Israelis soldiers were killed in the blast. The following day Israeli warplanes attacked Hizbullah targets in the town of Jibshit, and artillery bombardments were directed onto villages in the region. Despite these developments, Turner's eventual release seemed to indicate that the various parties to the hostage-prisoner exchange were committed to seeing the affair ended. Senior UN officials say Mr. Perez de Cuellar is hoping that all hostages and prisoners can be set free before the end of the year - when he leaves office. "Of all the unfinished business, this is one file he would like to see closed before he steps down," one official said. But diplomats in Beirut who are in touch with pro-Iranian Shiite groups caution against excessive optimism. "I don't think there is going to be a sudden freeing of everyone," one Western envoy said. "It will be a slow process, taking a couple of months or so to complete. But what's encouraging now is that there are signs that it will finally be completed." Diplomats also point out that while Iran would like to end the hostage saga, the Iranians are opposed to the opening of the Middle East peace conference in Madrid - which will see Arab governments negotiating directly with Israel. Therefore, the diplomats say, Iran would want to distance the final freeing of all Westerners from the opening of the Madrid talks.