June 2, 1982

The Reagan Administration said today that it had begun talks with China on the possibility of an agreement on nuclear cooperation that would enable American companies to help develop China's nuclear power industry. Deputy Secretary of State Walter J. Stoessel Jr. made the disclosure in a policy speech on China in which he said that President Reagan valued United States relations with China ''highly'' and ''believes it is important to work together to expand the benefits to both countries.'' Contending that too much attention had been paid to Washington-Peking differences over Taiwan, Mr. Stoessel also revealed that in a recent directive Mr. Reagan reaffirmed a policy of ''substantial liberalization'' in the export of technology to China. Mr. Reagan, according to Mr. Stoessel, declared that American export policy ''should support a secure, friendly and modernizing China.''

Cracow remains quiet under martial law A2 New York Congressman presses El Salvador on nuns A4 Around the World A5 Sudan's leader suggests Arab meeting to try to end gulf war A6 Reagan defends British actions in Falklands A14 Government/Politics House returns to struggle with 1983 budget A21 Senator John C. Stennis wins renomination for seventh term A22 New York Assembly to consider bill to allow TV in courts B4 Koch warns of service cutbacks unless State Legislature acts B4 High Court upholds utility law in states' rights case B6 Washington Talk Government sharply cutting back on its publications A20 Briefing A20 Required Reading A20 Decision File A20 General Space shuttle's glow called an obstacle to some tests A9 Racial violence in Boston forces a black family to move A18 Missouri farmer freed from jail by bankruptcy judge A18 Around the Nation A18 Court blocks rescission of passive restraint rule for new cars A21 The city and the A.S.P.C.A. agree on closing a budget gap B3 Religion Pope exhorts Scots to vindicate their ancestors' struggle A16 News Analysis William Borders examines Britain's options in the Falklands A14 Drew Middleton examines decision facing British military A15 The Living Section Food Raw shellfish: How risky is it? C1 The syntax of food adds spice to language C1 A Northerner's way with soul food C1 In Antarctica, food keeps out the cold C3 The 60-Minute Gourmet: "variety meats" at home C3 Food Notes C9 Wine Talk: the rich, spicy zinfandel of Lytton Springs C16 Living Once again, etiquette is a popular topic C1 Metropolitan Diary C2 Kitchen Equipment: an electric rice cooker C2 Personal Health: precautions against exotic ailments C12 Discoveries C18 Arts/Entertainment A 1969 film, "A Time for Dying," in New York premiere C19 Authors beg editors at convention to buy manuscripts C21 Hollywood is forced to take a new look at ratings system C21 Rock musicians's special affinity for Hoagy Carmichael C23 Kid Creole has a possible break- through rock album C23 Joyce Theater for dance opens in Chelsea C23 "American Journey" by Richard Reeves is reviewed C25 Collector surrenders two Durer paintings he bought for $450 C26 WABC-TV dominates New York City ratings for news programs C26 Obituaries Eleanor Naylor Dana, philanthropist and social leader B5 Sports Vecsey on Indy's pace-lap blues B6 Jays, on 4 in 8th, beat Yanks B7 Braves turn back Mets, 7-3 B7 Fairbanks to coach New York team in new football league B7 Lakers rout 76ers, lead, 2-1 B7 76er owner makes presence felt B7 Wilander upsets Gerulaitis, Miss Austin loses in French Open B9 Features/Notes Man in the News: Roger Mark Adelman, Hinckley attorney D19 About New York B3 Sports People B8 Going Out Guide C19 Editorials/Letters/Op-Ed Editorials A26 On disinheriting the P.L.O. Trimming interest rates A new standard for Mr. Smith Topics: competition Letters A26 Russell Baker: more on the school necktie amendment A27 James Reston: Reagan's grand tour of Europe A27 Jonathan Power: Palme's report on disarmament A27 Aaron D. Rosenbaum: Middle East peace A27

The Supreme Court ruled today that manufacturers of generic drugs whose products imitate the shape and color of name-brand drugs cannot ordinarily be held liable when pharmacists mislabel and sell their generic product as the higher-priced brandname drug. The decision was an important, if partial, legal victory for the generic drug industry. It overturned a ruling by the Federal appeals court in New York that three generic manufacturers were liable for ''contributory trademark infringement'' because pharmacists had been substituting their product for the identical-looking brand-name drug, Cyclospasmol. More Important Question However, the Supreme Court did not rule on the more important legal question of whether the generic manufacturers' practice of imitating the appearance of the brand-name drugs constitutes, by itself, a trademark infringement. The Court directed the appeals court, the United States Court of Appeals for the Second Circuit, to decide that issue.

Pabst, itself a takeover target of two other brewers, is seeking 49 percent of Olympia Brewing for $35.56 million. The announcement startled the financial community. It also came as a surprise to Olympia, which said its board would probably discuss the offer today. Pabst is the fifth-largest brewer, and Olympia is No.8. (Page D1.) Mesa Petroleum said Cities Service had rejected its $3.8 billion takeover bid. Cities Service, in an effort to cut off Mesa's financing, was reportedly ready to question Mesa's bankers to see whether they knew of its takeover plans. The bankers are thought to be Continental Illinois and the Bank of Montreal. (D1.)

A music note in Arts and Leisure Sunday gave an incorrect location for the concert performance of the Lat- vian national folk opera ''Banuta'' on Saturday at 2 P.M. It will be at Carne- gie Hall.