July 21, 1981

Stock market prices broke on a wide front yesterday amid mounting fears that interest rates would remain high and eventually damage the economy without achieving further success in reducing inflation. The Dow Jones industrial average fell 18.36 points, to 940.54, in the biggest one-day decline since Jan. 20, when it fell 20.31 points. The decline brought the index closer to its lowest level of this year, 931.57, which it reached on Feb. 13. Many investors were discouraged by President Reagan's apparent rejection of pleas for lower American interest rates made by leaders of the major industrial countries at the economic summit meeting under way in Ottawa. Industrialized nations have been adversely affected by the high United States interest rates that have caused an outflow of investment funds from their countries.

Muscovites take to beaches and dachas in a singular heat wave A2 Death of Taiwan professor causes uproar on Pittsburgh campus A2 200,000 Chinese reinforce dikes along the Yangtze River A4 Around the World A5 Israeli woman killed in rocket at- tack on a kibbutz A6 Militant Ulster Protestants grimly follow hunger strikes A9 Government/Politics California ends first phase of fly spraying as quarantine widens A10 Bush tells Urban League old agenda is out A11 C.I.A. upheld on withholding documents from ex-agent A11 Citizens Union assails City Coun- cil redistricting plan B3 A City Council committee extends three taxes for another year B6 Carey vetoes bill to allow forcible removal of cult members B7 Philadelphia's Third District votes for Congressman today B8 Redistricting difficult for grow- ing states, too B8 Accuser of C.I.A. aide reportedly disappears B8 General Around the Nation A10 Kansas City subdued as hotel funerals begin A10 New York's youth program clean- ing city's subway stations B1 Young horticulturists helping to restore New York City parks B1 RKO offers to move WOR-TV to New Jersey B1 The City B3 General Assembly adopted decla- ration on children's rights B4 Buffalo man arraigned in two Manhattan knifings B5 Federal agencies join hunt for convict in East Side slaying B6 Coast Guard saves fishing vessel carrying marijuana B7 Science Times Engineers tame temperatures in quest of energy revolution C1 Psychotherapists concentrate on last sessions of therapy C1 Education: Number of black Ph.D. candidates falls C1 The dinosaur may have been a sprightly beast after all C1 Science Watch C2 President's choice for science ad- viser is cautious C3 Science Q&A C3 About Education: Hopeful view on recovery of urban schools C5 Industry/Labor Minnesota state employees strike for new contract A10 New agency proposed to distrib- ute low-cost New York power B2 Alternative plans for mail deliv- ery made in case of strike B9 Religion Tax Commission rules in favor of Trinity Lutheran Church B3 Arts/Entertainment Book publishers disenchanted with novelizations of movies C7 Polanski, on Polish stage, finds himself enmeshed in politics C8 "Images of Labor" exhibition opens at the Smithsonian C8 Martha Graham receives $25,000 Scripps dance award C10 Katharine Scherman's history of Irish Christianity is reviewed C10 30 groups bid rejection of broad- casting deregulation C15 Style Notes on Fashion C6 Their warp and woof is business savvy C6 A cube popular in all circles C6 Sports Baseball talks move to Washing- ton amid news blackout C11 Baseball teams wonder if fans will return C11 Giants plan to use shotgun offense in some situations C11 Baird aims to get Jets back on bump-and-run defense C11 Sale of yearling colt for $3,500,000 sets world record at Keeneland C12 N.F.L.'s net income put at $836,000 per team C12 George Vecsey on how soccer stars miss boys of summer C13 Features/Notes Notes on People B7 Issue and Debate: Should income taxes be indexed to inflation? D1 News Analysis Leonard Silk discusses conflicting views on high interest rates A1 John Darnton assesses Polish party congress A3 Drew Middleton discusses mili- tary manpower needs B20 Editorials/Letters/Op-Ed Editorials A14 Bad advice on immigration Secrecy is not the only security Light on life and love Peter Passell: baseball cards Letters A14 Sydney H. Schanberg: the risks on Westway A15 Tom Wicker: no ambiguity justi- fied A15 Harry Rositzke: K.G.B. disinfor- mation A15 Mamie Phipps Clark: museums' options A15

Leaders of seven major industrial democracies today endorsed an American proposal to discuss the possibility of further restrictions on trade with the Soviet Union, but they came to no agreement on whether to proceed with this course of action. In the first full day of their conference at the Chateau Montebello, a sprawling resort in the Laurentian Mountains 40 miles downriver from here, the seven leaders were reported to be finding themselves increasingly divided on political as well as economic questions. The American initiative called for a high-level meeting this year to discuss restricting high-technology and military-related exports to the Eastern bloc in response to what is perceived as increasingly aggressive Soviet behavior around the world. In the weeks before the conference, Reagan Administration officials said they were hoping to achieve a ''common perspective'' in favor of President Reagan's proposal to restrict export of high technology and other items to the Soviet Union. Restrictions 'Worth Discussing' This afternoon a senior Reagan Administration aide said, however, that the action by the seven leaders today simply implied ''a recognition by some of these leaders that a tightening is worth discussing'' and not an agreement to actually do so.

International Plane deliveries to Israel were halted indefinitely by President Reagan in an effort to promote a cease-fire in Lebanon. Meanwhile, leaders of six other major industrial nations joined Mr. Reagan in issuing a statement deploring the escalation of fighting in the Middle East and calling for restraint by Israeli and Palestinian forces. (Page A1, Column 6.) Yasir Arafat vowed to fight back against the ''barbarian war'' that he said had been started by Israel. As Israeli artillery and jets pounded Palestinian positions in southern Lebanon for the 11th consecutive day, Mr. Arafat, the head of the Palestine Liberation Organization, said in Beirut: ''We have nothing to lose.'' (A1:5.)

THE popular notion of the dinosaur pictures a ponderous, lumbering behemoth whose great hulk and weight and deliberate movements kept it from roaming far from its birthplace. But if dinosaurs were so huge and clumsy, why do some of their anatomical features resemble those of modern animals who move rapidly and vigorously? And if dinosaurs were indeed homebodies, why have fossil discoveries in western North America shown that identical species managed to appear in areas thousands of miles apart? A scientist at the Smithsonian Museum of Natural History in Washington thinks he may have found some of the answers. Dr. Nicholas Hotton, a paleobiologist who has studied countless numbers of dinosaur fossils and the sites where their bones were found, believes that some dinosaur species migrated back and forth each year between locations as much as 2,000 miles apart. He thinks the following events were acted out: - Some 70 million to 75 million years ago in the Late Cretaceous Period, herds of two-footed, plant-eating hadrosaurs, a group of duck-billed dinosaurs that towered 10 to 20 feet above the ground and weighed up to eight tons, flourished in North America. After the spring equinox the animals became aware that rising temperatures, longer daylight hours and new plant growth were moving northward and extending their foraging range. So they, too, moved steadily northward in their search for food and warmth.