March 1, 1986

Mayor Koch dismissed his Commissioner of Business Development yesterday for owning stock in a company that is relocating - and is receiving financing for its move - with city help. The Commissioner, Lawrence Kieves, became the fourth commissioner to submit his resignation this week, as the Mayor sought to restore stability amid widening investigations into allegations of municipal corruption involving at least 12 city agencies. Mr. Kieves submitted his resignation at the Mayor's request, he and the Mayor said. His departure came on the day that a former deputy director of the city's Parking Violations Bureau was arraigned on charges of extorting $410,000 from companies collecting fines for the bureau. [ Page 29. ] Since the Mayor's re-election in November, what was expected to be a routine third-term staff reorganization has come to involve 19 high-ranking officials, and additional changes have not been ruled out.

President Jose Sarney ordered drastic economic changes today in ''a war of life and death'' against inflation. The decree includes a wage and price freeze and the creation of a new currency. The President said he acted because inflation had become Brazil's ''worst enemy.'' He appears to have been galvanized into action by sharp price rises in January and February. Inflation over the last 12 months was 255 percent, but the latest price rises were pointing Brazil toward an annual inflation rate of 500 percent.

President Corazon C. Aquino today ordered the release of all remaining prisoners jailed by the Marcos Government on charges that are considered political by the new Government. The President's order promptly became surrounded by confusion and controversy, with debates inside and outside the Government on both the definition of political crimes and the wisdom of freeing people believed to be leaders of armed insurgencies. Also today, Mrs. Aquino said she was studying the option of declaring what her aides called a ''revolutionary government'' that would allow her to bypass the institutions left behind by former President Ferdinand E. Marcos. [ Page 6. ] Army 'Bound by Order'

White House officials said today that Dr. James C. Fletcher, a former Administrator of the National Aeronautics and Space Administration, had emerged as the leading candidate to take over the troubled agency in the wake of the Challenger disaster. A senior aide to President Reagan who asked not to be identified said that Donald T. Regan, the White House chief of staff, had already spoken to Dr. Fletcher about the job and told him he was the leading candidate. The same official and others in the White House said that a strong consensus was building around Dr. Fletcher, not only in the White House but also in Congress and in other quarters involved with space. Support in House and Senate Senator Jake Garn, Republican of Utah, who is the chairman of a Senate subcommittee on space budgets, has twice strongly recommended Dr. Fletcher to the White House, an aide to the Senator said today. The aide said he understood that several other chairmen of key Senate and House subcommittees dealing with the space agency had also either recommended Dr. Fletcher or said they would be happy if he was selected, but this could not be immediately verified today.

Prime Minister Olof Palme of Sweden was assassinated Friday night on a Stockholm street minutes after he left a movie theater with his wife. Mr. Palme, the leader of the country's Social Democratic Party, was 59 years old. #10 Questioned by Police There were no immediate arrests. The police said they had questioned about 10 people at the site of the shooting but had learned little, although at least one person, a taxi driver, said he had seen the shooting.