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Talks aimed at liberalizing agricultural trade broke down Tuesday over disagreements between U.S. and Western European negotiators over the extent to which farm subsidies should be curbed, a GATT spokesman said.

Delegates from two dozen Western countries, meeting in a second day of talks on agriculture, remained at an impasse over whether farm subsidies should be eliminated altogether, as the United States wants, or frozen and then reduced over several years, a remedy favored by the 12 countries in the European Economic Community."Talks have stopped for the time being," GATT spokesman David Woods told reporters.

The General Agreement on Tariffs and Trade, established in 1947, is the only treaty that sets rules for world trade. Delegates from 90 GATT signatory countries are meeting in Montreal this week to review two years of negotiations on trade liberalization.

Farm subsidies distort agricultural trade by enabling food producers on both sides of the Atlantic to lower the prices at which they sell goods abroad and gain an advantage against domestic producers.

Western European and U.S. trade negotiators have been at loggerheads over whether to eliminate or merely curb the subsidies.

U.S. Deputy Trade Representative Alan Holmer lashed out at negotiators for the Common Market nations Tuesday, saying they lacked the "political will and fortitude to do what is right for the world."

Woods said a mediator was meeting separately with American delegates and representatives of European countries in an attempt to break the deadlock and get the talks moving again.

IMF managing director Michael Camdessus said even though most industrialized nations have reduced tariffs on imports, trade-distorting farm subsidies continue to multiply, restricting markets for tropical products and other goods produced by Third World countries.

"Ominous strains have emerged in the trading system," Camdessus told finance ministers.