March 2, 1985

Julio Maria Sanguinetti took office as the elected President of Uruguay today, restoring this country's long democratic tradition after 12 years of military rule. The inauguration also underscored the trend toward democracy throughout Latin America: Uruguay became the eighth country in the region to pass from military to civilian government since 1979. Mr. Sanguinetti, a 49-year-old lawyer with centrist political views, immediately pledged that government by fiat ''will not happen again because all Uruguayans will turn democracy into our great national cause.'' Foreign Dignitaries Present The new President was sworn in before Congress and an array of foreign dignitaries, including the Presidents of Argentina, Bolivia, Colombia, Costa Rica, Guatemala and Nicaragua and the Prime Ministers of Spain and Italy.

The Government index designed to predict the course of the economy jumped 1.7 percent in January, the biggest increase in 19 months, the Commerce Department reported today. Economists said the advance, which was somewhat larger than expected, indicated the economy was moving smartly ahead - probably at a pace exceeding the 4.2 percent average growth for the third year of postwar recoveries. In 1984, the economy grew by 6.9 percent after allowing for inflation. ''It's one more sign that 1985 will be a good year,'' Marc M. Goloven, an economist for the Manufacturers Hanover Trust Company, said of the latest report. ''Last fall's fears of a growth recession have been virtually buried.''

The Bank of America sued six employees today, charging them with ''gross negligence'' for their involvement in a mortgage-backed securities scandal that has led to huge losses and embarrassment for the bank. Five of the six employees have been dismissed and the sixth was demoted, the bank said. All six were based in the Los Angeles area. The suit filed in state court provides the bank's answer to the question of whether its employees defrauded it or were merely sloppy. ''We simply do not have any basis to believe or suspect fraud or criminal acts by any of our employees,'' said Winslow Christian, director of litigation for the bank.

''They are the moral equal of our Founding Fathers and the brave men and women of the French Resistance.'' - President Reagan, speaking about Nicaraguan rebels. (1:2.)

Building fires in New York hit a 20-year low last year, according to statistics released by the Fire Department. Fires in buildings fell to 34,626 in 1984 - a 39 percent drop from their high of 56,810 in 1976, and the lowest level since 32,863 in 1964. Arson in buildings fell to 5,157 in 1984 - a 62 percent drop from a high in 1976 of 13,752, and the lowest level since 5,097 in 1967.