August 25, 1984

In one of the largest real-estate deals in New York City history, Merrill Lynch & Company signed a rental contract yesterday to move its corporate headquarters into two towers in Battery Park City. The company, the world's largest brokerage concern, will consolidate operations from 11 buildings in Manhattan into 3.9 million square feet of office space, nearly twice the space in the Empire State Building. Merrill Lynch officials declined to disclose the value of the contract, but they estimated they would save 25 percent of their occupancy costs with the consolidation. Real-estate experts estimated the total value of the rent over 25 years to be in the range of $1 billion.

Walter F. Mondale journeyed to main- street America today to denounce the Reagan Administration as ''government of the rich, by the rich and for the rich.'' ''That's what we will change in 1984,'' he buoyantly promised a sun- dappled crowd of 3,000 onlookers. ''Let the campaign begin.'' The same theme - attacking the Republicans as the party of the rich - was sounded by Geraldine A. Ferraro, Mr. Mondale's running mate, as she campaigned in Alabama. Before leaving for the South, she said she might have hesitated to accept the Vice-Presidential nomination if she had known ahead of time about the ordeal she would face over her family finances. (Page 29.)

Archbishop John J. O'Connor of New York said today that he considered it his duty to correct politicians if they offered incorrect views on Catholic teachings. ''It is my responsibility to spell out for Catholics what the church teaches,'' the Archbishop said. ''If anyone in public office wishes to differ, wishes to say that is not Catholic teaching, than that individual ought to prove it is wrong. And if an individual does attempt to articulate Catholic teaching and it is not truly Catholic teaching, it is my responsibility to say something.''

The American Telephone and Telegraph Company said yesterday that it will eliminate 11,000 management and blue-collar jobs nationwide by early next year as part of its continuing effort to cut costs. The cutbacks, which had been rumored for weeks, reflect the difficulty that A.T.& T. is having in adapting to the competitive telecommunications environment since the breakup of the Bell System on Jan. 1. In the past, A.T.& T. has routinely laid off manufacturing employees temporarily during economic downturns, but the cutbacks disclosed yesterday would be the first of their kind in modern times at the company, where lifelong employment has been commonplace. Cost-Cutting Measures A.T.& T., which has reported earnings well below its earlier projections for its first year without the local Bell operating companies, has been struggling for most of the year to bring its high costs under control. It has already frozen wages for 114,000 management- level employees, announced the closing of four plants and cut 5,000 workers from its payrolls through attrition, resignations and special early retirement programs. A.T.& T. employs 373,000 people nationwide. After a flurry of rumors throughout the day, A.T.& T. officials said late yesterday that the cutbacks would be concentrated in the 53,000-employee equipment maintenance and service operations of AT&T Technologies, the unregulated A.T.& T. subsidiary that is spearheading the parent's push into the highly competitive computer business.

In a new step toward ending decades of political violence here, the Government signed a cease-fire agreement today with one of the country's principal leftist guerrilla groups. The agreement with the guerrilla group, the April 19 Movement, also known as M-19, followed conclusion of a similar accord with two smaller rebel groups Thursday and with the powerful Colombian Revolutionary Armed Forces in March. The signing today was delayed briefly after a police ambush in which four guerrillas going to the ceremony were wounded. Colombia is the first country in Latin America's long history of leftist insurgency in which a government and a guerrilla movement have successfully negotiated an armistice.

President Reagan pressed his attack on the Democrats today, saying they were responsible for a ''dismal chapter of failed policies and self-doubt.'' He likened their support for a nuclear freeze and cancellation of key weapons programs to the views of a ''jackass.'' Speaking to 1,500 applauding members of the Veterans of Foreign Wars, Mr. Reagan made his comments while suggesting ''it would have been indefensible and immoral'' to allow American military strength ''to continue deteriorating as it was'' before he took office. He said that ''some may insist they 're just as committed to a strong deterrent even as they would cancel'' production of the B-1 bomber and the MX missile. He said these people ''may deny that a nuclear freeze would preserve today's high, unequal and unstable levels of nuclear weapons.''

The Defense Department's senior official responsible for military readiness says American forces could fight in a conventional conflict of the intensity of World War II for at least 30 days with the supplies on hand, twice as long as four years ago. The official, Lawrence J. Korb, also said in an interview that the readiness of the armed forces and their ability to continue fighting would double again by the end of the decade, to 60 days, if Congress approved President Reagan's military budgets. Mr. Korb, the Assistant Secretary of Defense for manpower, installations and logistics, provided the most specific defense of the Reagan Administration's posture on military readiness since the release of a critical report by the staff of the House Appropriations Committee a month ago. Disputes With Democrats The report contended that military readiness had declined, despite rising military spending, and that United States forces could not sustain combat against the Soviet Union or many lesser powers. The Appropriations Committee is controlled by Democrats, and since it released the staff report Secretary of Defense Caspar W. Weinberger and other Administration officials have traded charges with leading Democrats over military readiness. Walter F. Mondale, the Democratic Presidential candidate, has contended that too much money has been spent on nuclear arms and not enough has been spent to make conventional forces ready.

Chile's military Government said today that the police had killed eight suspected guerrillas in a drive against terrorists. The Government said the results of the operation showed ''armed Marxists'' were active in Chile. The police said a ninth person was slain accidentally when he was caught in a shootout during the nationwide search for terrorists.

Two years ago the vast Clarendon Plain here, 35 miles west of Kingston, was covered with thick jungle and underbrush. Now, more than 5,000 acres of the reddish brown earth are plowed in neat furrows that yield tomatoes, melons, peppers, cucumbers and flowers. More than 100 acres have been carved into fish-breeding ponds. The farm, which is using an irrigation system developed 15 years ago at a kibbutz in Israel, is regarded here as a technological wonder, producing 50 to 75 percent higher yields than Jamaican experts had anticipated. It is all the work of as many as 1,600 Jamaican laborers working for daily wages and a group of 32 Israeli agricultural experts.

Riot policemen fired tear gas and water cannon today at hundreds of demonstrators massing to protest human rights abuses attributed to Government troops pursuing Maoist guerrillas in the country's Andes region. Nearly 2,000 people chanting ''No more violence!'' were driven by security forces out of Campo de Marti, the park where they had gathered for a march called by leftist groups.

At least half a dozen Sikhs demanding to go to the United States seized an Indian jetliner with about 100 people aboard on Friday, made two stops in Pakistan and one in the Middle East. Airport officials in the United Arab Emirates said the short-range Indian Airlines Boeing 737 made a refueling stop in Dubai after landing in Lahore and Karachi, Pakistan. People at the Bahrain airport said they overheard a radio exchange between the hijacked plane and the Dubai control tower, and it raised questions about the number of hijackers and how many people were aboard.

The Government announced Thursday that it was willing to hold talks with the separatist guerrilla group E.T.A. to seek a truce that would end years of violence in the northern Basque region.