May 17, 1983

The White House announced today that the Federal Government would encourage private industry to build and operate expendable rockets in competition with the Government's space shuttle. The announcement was described as an effort to strengthen the American space-launching capability, develop a major industry and improve the economy. John Logsdon, a space policy analyst from George Washington University, currently on leave writing a book on the space shuttle, called the step ''a significant move that allows the private sector to try its hand at competing with the Government for launch business.''

When banks were permitted to offer their own money market accounts in December, the nation's mutual funds warned that the extraordinarily high introductory rates offered by most banks to draw depositors away from the funds would not last forever. They were right. In fact, the high rates barely survived a few months. By one reckoning last week, the average rate offered on federally insured bank money market accounts nationwide, 8.13 percent, topped the average rate for mutual funds by only a quarter of a percentage point.

A teacher's aide dismissed recently after a fight with a student returned to a Long Island school yesterday wearing military fatigues and carrying a rifle, shot the youth and the principal and took 18 students hostage. Nine hours later, after releasing 17 hostages unharmed in groups and singly through the day and the evening, the gunman, 24-year-old Robert O. Wickes, fatally shot himself in the right temple while the last hostage, Bryant Lopez, 14, looked on in a second-floor classroom. Shortly afterward, the gunman's lawyer, Gerald Lotto, looking shaken, emerged from Brentwood East Junior High School, where the siege had taken place, and faced a crowd of reporters. ''He shot himself and he's dying,'' Mr. Lotto declared. ''Isn't that enough?'' Ending Daylong Drama Mr. Wickes, who shot himself at 10:15 P.M., was pronounced dead at Southside Hospital in Bay Shore at 11:41 P.M., ending a daylong drama that had turned the quiet community of Brentwood, 40 miles east of Manhattan, into turmoil. The community has 80,000 residents and the junior high school has 980 students.

Stock prices plummeted as concern spread about the outlook on interest rates. The Dow Jones industrial average closed down 15.77 points, to 1,202.98. On the overall market, declines outnumbered advances by more than 3 to 1. Analysts cited Friday's report of a recent surge in the basic money supply, which could prevent the Federal Reserve Board from encouraging lower interest rates. (Page D1.) Yields on long-term bonds rose sharply and prices fell, while in the short-term market Treasury bill yields rose very slightly. The Treasury auctioned $7.4 billion in three- and six-month bills instead of the $12.4 billion usually sold each Monday. (D13.) The dollar rose to a new high of 7.4138 against the French franc in U.S. trading. Gold prices declined $2.50 an ounce, to $438, in New York. (D18.) Prices of Treasury bond and bill futures fell sharply. (D18.)

The Lebanese-Israeli security agreement, which is to be signed in both countries Tuesday, places strict and detailed limits on the deployment of Lebanese military personnel and weapons in southern Lebanon. The accord was approved today by both the Israeli and the Lebanese Parliaments, although approval by either body was not legally required. The Israeli Parliament approved the accord by a vote of 57 to 6, with 45 members of the opposition Labor Party abstaining. In Lebanon, it was approved unanimously. According to the text of the agreement, which was made available tonight, two Lebanese Army brigades can be stationed in the southern security zone with the equipment they normally carry: 40 tanks, 18 towed 155-millimeter artillery pieces, 39 mortars and 30 antitank weapons for each brigade. No antiaircraft or ground-to-sea missiles and no military radar that can search Israeli territory will be permitted.