What was going on when I was born?

President Reagan and Prime Minister Felipe Gonzalez agreed today to start discussions leading to the eventual withdrawal of the 12,000 American troops stationed in Spain, according to American and Spanish officials. White House aides said the agreement was essentially a trade-off in which the United States would start serious negotiations for the military reduction as long as Spain remained in the North Atlantic Treaty Organization. Spain is to hold a referendum next year on whether to remain in the alliance. One Dispute: Nicaragua As Mr. Reagan concluded a two-day visit here, he and Mr. Gonzalez, a Socialist, emerged from apparently amicable meetings in conflict over one key issue: United States policy in Nicaragua.

Vietnam veterans accepted New York City's thanks yesterday at a bittersweet ticker-tape parade through the canyons of lower Manhattan. The blizzard of confetti that greeted the 25,000 marchers, all veterans of America's most unpopular war, culminated a night and a day of celebration orchestrated by the New York Vietnam Veterans Memorial Commission. The belated welcome home from a war that ended 10 years ago began Monday night when Mayor Koch lighted the Vietnam Veterans Memorial, adjacent to 55 Water Street. It continued yesterday when a thunderously appreciative crowd, which the police estimated at one million, lined the parade route from Cadman Plaza in Brooklyn to the Battery.

At the beginning of the week they were a tentative bunch, 65 salesmen, jewelers, doctors, businessmen, orthopedists, lawyers, accountants, restaurateurs, construction and computer executives, dentists, dermatologists and writers. Two were women who called themselves housewives, most were at or nearing middle age and all were wondering whether their decision to come south to play baseball had been wise. By week's end they knew. Their uniforms, replicas of those worn by the Yankees, Giants, Dodgers and Cubs, were smudged with dirt, but they didn't care. The peaks of their caps had been curled to the right arch. The bridges of their noses were sunburned. They chewed bubble gum or tobacco incessantly. They spit a lot. They threw knuckleballs. Their talk was of how many hits they had made, how many catches, who had robbed whom with a great stab, and how if that ground ball hadn't taken a bad hop they would have got the guy at first. When they ran on and off the baseball diamond they gave each other open-palm, high-five congratulatory slaps.

WEDNESDAY, MAY 8, 1985 International A cut in American forces in Spain is in prospect. United States and Spanish officials said that President Reagan and Prime Minister Felipe Gonzalez had agreed in talks in Madrid to begin discussions leading to a reduction and eventual withdrawal of the 12,000 American military personnel in Spain. But American officials said such a move depended on continued Spanish membership in NATO. [Page A1, Column 6.] Italy opposes Washington's embargo on trade with Nicaragua. Prime Minister Bettino Craxi said Rome would not join the economic embargo and would proceed with a $25 million project in Nicaragua. [A7:1.]

IT was like growing up next door to the circus, he says now, and knowing that you wanted to be an acrobat or a clown. Jean-Louis Gerin was born in Talloires, a town on the shore of Lake Annecy that is the site of the Auberge du Pere Bise, considered for decades to be one of the finest restaurants in France. Today, at 27 years of age, Mr. Gerin is a head chef himself as well as part owner of the small, 36-seat Restaurant Guy Savoy in Greenwich, Conn. In a little over two years at Savoy, Mr. Gerin has attracted considerable attention himself, as well as a loyal clientele who enjoy putting themselves in his hands. Instead of asking for a menu, they simply inquire whether to order red or white wine, and then wait for their food. This is the way Mr. Gerin prefers it. ''I like to feel they have confidence in my cooking and that I know their taste,'' he explained. A few of Mr. Gerin's best dishes are a nage of shrimp (in a shrimp broth), briefly cooked and masked with a white butter sauce; skinless, boneless chicken breasts stuffed with a finely chopped black truffle and a dessert from his childhood, a jellyroll-style rolled apricot cake.

''There was a time when it was difficult to accept the lack of recognition.

A state appellate court panel yesterday upheld Mayor Koch's authority to bar discrimination against homosexuals by private agencies - including church-run agencies - that do business with New York City. In a 3-to-1 decision, the Appellate Division of State Supreme Court in Manhattan ruled that the Mayor had not only the authority but also a ''constitutional obligation'' to bar all forms of discrimination that were not related to job performance. ''Where sexual proclivity does not relate to job function, it seems clearly unconstitutional to penalize an individual in one of the most imperative of life's endeavors, the right to earn one's daily bread,'' Justice Sidney H. Asch wrote for the majority. Three Challenges The decision overturned a lower-court ruling on three challenges -brought by the Salvation Army, Agudath Israel of America and the Roman Catholic Archdiocese of New York - to a mayoral executive order of 1980.

For a majority of Germans, the solemn event that will be marked here on Wednesday - the 40th anniversary of Nazi Germany's surrender - is a reminder of the end of their parents' or grandparents' war, a war that is, at most, only a childhood memory. The passionate debate of the last month, which was set off by the announcement of President Reagan's plan to visit the German military cemetery at Bitburg, illustrated what some sociologists and pollsters believe is a deep generational divide between older and younger West Germans. Chancellor Helmut Kohl, 55 years old, was determined that Mr. Reagan would visit the Bitburg cemetery, even at the cost of straining West Germany's ties with the United States, its most important ally. Youth and Age By contrast, many West Germans in their 20's did not appear to feel the need for a ''gesture of reconciliation'' at Bitburg, which, in symbolic terms, was seen as amounting to an American absolution of the sins of their fathers and their grandfathers under the Third Reich. The only political party that demanded cancellation of the Bitburg stop was the leftist, antinuclear Green Party, whose supporters are predominantly in their 20's and early 3O's.

Saying that he wants organized baseball to be a leader in eradicating drugs from society, the commissioner of baseball yesterday ordered all major league personnel except the unionized players to submit to drug tests and urged the players to join the program as well. ''We will include everyone from the owners on down,'' said the commissioner, Peter V. Ueberroth. He indicated that he, too, would submit to the tests along with the more than 3,000 minor league players and all scouts, coaches and other nonplaying personnel of the 26 major league teams. The staffs of the American and National Leagues and the central baseball offices, including his own 40-member staff, would also be subject to tests.

Legislative leaders have agreed on a measure to permit judges to take over the main role in questioning prospective jurors in New York courts. The measure would amend current law to curb a power long cherished by lawyers and would put into effect a system that Sol Wachtler, the state's Chief Judge, has urged. The measure would not exclude lawyers from all questioning; rather, it would put judges in charge of the questioning and encourage them to circumscribe the lawyers' role. Now, lawyers customarily do the questioning - known as voir dire -and often, at considerably length, use it to sketch their cases and empanel jurors who seem favorable to their case.

GOVERNMENT studies making the connection between what we eat and how healthy we are have proliferated in recent years. In the face of statistics showing that coronary diseases account for half of all deaths in the United States, many Americans have adjusted their eating habits.

A major Manhattan real-estate company and one of its vice presidents pleaded guilty yesterday to charges resulting from the illegal nighttime demolition of four Times Square buildings in January. The company, the West 45th Street Macklowe Corporation, and its vice president in charge of construction, John Tassi, were allowed to plead guilty to misdemeanor charges of reckless endangerment without receiving any jail sentence. In an agreement with the city, Harry Macklowe, the president of the real-estate company and the buyer of the buildings, agreed to give the city $2 million to help build and maintain single-room-occupancy dwellings in the city. The four buildings, all on 44th Street between Seventh Avenue and the Avenue of the Americas, were torn down in darkness two days before a proposed moratorium on the destruction of all single-room-occupancy hotels was to take effect.