May 11, 1984

PAUL LEWIS PARIS, May 10 - The Roman Catholic Church will pay creditors of the failed Banco Ambrosiano group $244 million, believed to represent nearly half the Vatican's liquid assets, under terms of an agreement to be signed in Geneva in two weeks, bankers close to the negotiations said today. They said the payment, due in cash on June 30, is described in documents sent to the 120 creditor banks as ''recognition of moral involvement'' by the Vatican in the loss of some $1.3 billion when the Milan-based Banco Ambrosiano group went into liquidation in 1982. (A spokesman for the Vatican said there were be no immediate comment on the bankers' report.) An important aspect of the Ambrosiano settlement, the bankers said, is that all parties have agreed that any disputes over its terms will be arbitrated before Italian courts. This would be the first time that the Vatican, which is an independent state situated in the middle of Rome, has agreed to subject itself to Italian law.

When Norman Wheeler announced the annual debate on Machiavelli to his senior social-studies class last week, Danny Goldberger at first thought of taking Machiavelli's side. If you did not side with Machiavelli, Danny reasoned, it meant you were in the same boat as Cicero, and Danny had misgivings about Cicero's idealism. ''Cicero was a little buttered over and too peachy,'' Danny said. That night, Danny talked over Machiavelli with his friend Kenny Moss when they went to see ''This Is Spinal Tap'' at the Loews Sixplex IV movie theater in Levittown. The morning of the debate, there was a rumor going around school that a classmate, Khedouri Ezair, had gone pro-Machiavelli and had taken out five extra books from the library for support. For a moment, when Danny saw the five books in biology class, he was unsure.

Friday SON OF FILM FLUBS As a sequel to its popular compilation of rare Hollywood footage last year, some from the cutting-room floor, the Thalia Theater on West 95th Street, near Broadway, has come up with ''The Rest of Hollywood Out- Takes.'' Offered as a ''sneak preview'' today and tomorrow, it includes a variety of film flubs as well as Judy Garland in screen tests for ''Valley of the Dolls,'' a film she never made; candid footage of Marilyn Monroe, Clark Gable, Montgomery Clift, Arthur Miller and John Huston on the set of ''The Misfits''; Edward G. Robinson talking French, and Lana Turner as Scarlett O'Hara, opposite Melvyn Douglas as Ashley Wilkes, testing for ''Gone With the Wind.'' Admission: $4.50 ($2.50 for children and over-65's before 5 P.M.). Information: 222-3370. A PLENITUDE OF PEONIES The peony seems to have fascinated people through the centuries, for the reputed healing powers of its strong-odored roots and foliage, and for the beauty of its red, pink or white flowers, whose fragrance resembles the rose, but is more delicate. So the American Museum of Natural History, Central Park West, at 79th Street, has opened an exhibition called ''Peonies of Greece: Myth, Science and Art.'' It includes lithographs by Takis Katsoulidis from botanical watercolors by Niki A. Goulandris. Also on view are manuscripts, woodcuts, engravings, Chinese lacquerware, pressed peonies and fresh-cut varieties. Pay-what-you-wish admission. Information: 873-1300.

A Federal district judge ruled today that radioactive fallout from above-ground nuclear tests in the 1950's caused nine people to die of cancer and that the Government was guilty of negligence in the way it conducted the tests. It was the first time that the explosions at the Nevada Test Site from 1951 to 1962 had been legally held to have caused cancers. The verdict therefore holds major implications for the outcome of half a dozen related suits pending in the courts and marks a new departure in the body of law on the harm of exposure to radioactivity. ''It's the first case where a major Federal activity involving radiation has been held responsible for harming civilians,'' said Stewart L. Udall, former Secretary of the Interior, one of the attorneys for the plaintiffs. ''I can't think of anything where the Government has been held to account like this. It makes it easier for citizens to gain redress. It opens the Pandora's box that the Government thought it could close.''

FRIDAY, MAY 11, 1984 Companies A.T.& T. was ordered to cut its long-distance rates 6.1 percent beginning later this month. The order, imposed by the F.C.C., will save consumers between $1.7 billion and $1.8 billion a year. But other actions taken by the F.C.C. will result in some increased charges for telephone users, particularly businesses. (Page A1.) The Comptroller issued a highly unusual statement denying rumors that Continental Illinois, the nation's eighth-largest banking organization, was in serious financial trouble. (D1.)