July 25, 1984

Israel's parties began negotiating for coalition partners after an indecisive parliamentary election Monday that gave the two major political alignments nearly equal strength. With 98 percent of the votes counted, the Labor alignment had 44 or 45 seats and the ruling right-wing Likud bloc had 40 or 41. (Page A1, Column 1.) Jose Napoleon Duarte, although embroiled in a civil war at home, has spent much of his first seven weeks as President of El Salvador working to improve his country's standing abroad. Mr. Duarte has met with some success in two visits to the United States and one to Western Europe. (A1:2-3.)

President Reagan said tonight that he had no plans for a tax increase next year as Walter F. Mondale has charged in his Democratic Presidential challenge to Mr. Reagan. Asked if he would rule out a tax increase next year, he replied, ''Yes.'' Mr. Mondale, the President said, attempting to turn the issue back on the Democratic nominee, ''has repeatedly and on any number of occasions supported tax increases over the years.'' Mr. Reagan, in the 26th televised news conference of his 42 months in office and his first since the nomination of Mr. Mondale, showed his sensitivity to election-year politics by announcing that he would ask Congress to permit a cost-of-living increase in Social Security benefits even if inflation fell below 3 percent. Under the law now, there would be no rise in benefits if prices rose less than 3 percent a year. (Page A15.)

WEDNESDAY, JULY 25, 1984 The Economy Factory orders for durable goods dropped 3.2 percent in June, the second drop in the last three months. The decrease indicated that factory output would slacken correspondingly in coming months, but was not taken as a sign of any abrupt halt to the economy's expansion. (Page D1.) Consumer prices were up only 0.2 percent in June, indicating that the low inflation that has persisted since the recession may be moving even lower. The rise, equal to May's, represents a compound annual rate of 2 percent. Prices of services were up, but gasoline and clothing were off with food barely higher. (D1.) Prices in the New York-northeastern New Jersey area rose 0.3 percent. (D6.)

A headline in some copies of Sports Pages yesterday with an article about a legal dispute between Dave Winfield and George Steinbrenner misrepresented remarks by the judge in the case. He urged both sides to settle, and at several points was critical of Mr. Steinbrenner's position.

President Reagan said tonight that the Democrats' nomination of Representative Geraldine A. Ferraro for Vice President was ''a logical step and one that possibly is overdue'' but that her critcism of his social spending program was without merit. ''I know there's been a lot of demagoguery about that,'' he said at his news conference when asked about Mrs. Ferraro's charge that he was not a ''good Christian'' because his budget- cutting policies were so ''totally unfair.'' Mr. Reagan, dealing gingerly with Mrs. Ferraro's candidacy, smiled and said, ''The minute I heard she'd made that statement, I turned the other cheek.'' Reagan's Strategy The President denied that in an earlier reaction to the nomination he had intended to characterize the choice of Mrs. Ferraro as ''tokenism.''