The billboard, erected overnight facing the U.S. Interest Section's offices, stands on the Malecon, Havana's famed coastal highway.

The U.S. mission, headed by James Cason, rejected a demand this week to remove Christmas decorations that included a reference to dissidents jailed by Fidel Castro's government.

The trimmings included a Santa Claus, candy canes, white lights wrapped around palm trees - and a sign reading ''75,'' a reference to the 75 Cuban dissidents jailed last year.

The sign was to show ''solidarity with people who are being held and intimidated and whose rights are being denied by the Cuban government,'' Secretary of State Colin Powell told The Associated Press Friday in Washington. ''And the Cuban government's response is to . . . show the world a swastika? I don't think that is very wise on their part.''

Cuba's Parliament Speaker Ricardo Alarcon called the U.S. mission's display ''rubbish'' on Wednesday and said Cason seemed ''desperate to create problems.''

Wayne Smith, who headed the U.S. mission here during the Carter and Reagan administrations and has long advocated restoring normal diplomatic relations with Cuba, said he thought the images of prisoner abuse in Iraq were an appropriate response.

''If I were in their shoes, this is what I would do - call attention to the fact that the United States is now guilty of torture, of massive violations of human rights,'' Smith said.

But the billboard's Nazi reference went too far, he added.