May 20, 1987

LEAD: Mayor Koch and the American Telephone and Telegraph Company announced a compromise yesterday that modifies the company's plan to relocate much of its staff from its Manhattan headquarters to New Jersey.

LEAD: Ferry service on the Hudson River, which began in 1661 and ended in 1967, has begun a comeback that could see hundreds of thousands of commuters heading to work each month aboard dozens of swift boats.

LEAD: Robert W. Owen, a ''foot soldier'' in the secret operation to help the Nicaraguan rebels, detailed today how he and Lieut. Col. Oliver L. North used the State Department's humanitarian-aid program to supply weapons to the rebels.

LEAD: The commander of the United States Persian Gulf force said tonight that the sophisticated electronic defenses aboard the frigate Stark were not turned on Sunday because the officers did not fear an Iraqi missile attack.

LEAD: Two polar bears mauled and killed an 11-year-old boy who climbed a fence at the Prospect Park Zoo in Brooklyn with two friends last night and then sneaked into the polar bear enclosure.

LEAD: The Justice Department said today that it was closing its three-year fraud inquiry into the General Dynamics Corporation because there was insufficient evidence to obtain a successful prosecution.

LEAD: THE ECONOMY Citicorp will increase its reserves for possible loan losses by $3 billion, a move that will result in a $2.5 billion quarterly loss for the nation's largest banking company. Citicorp also said it would step up its efforts to reduce its debt exposure in the third world. The company's action is likely to cause an upheaval in the banking community and in financial markets.

LEAD: The Koch administration has abandoned its plans to erect dormitory-style shelters for homeless individuals and will instead put up five buildings modeled on single-room-occupancy hotels, city officials said yesterday.

LEAD: A grand jury has indicted nine building maintenance supervisors and inspectors for the New York City Board of Education on charges that they joined in a bribe-taking conspiracy that was planned 10 years ago.

LEAD: A Federal judge yesterday granted the prosecution's motion to dismiss insider trading charges against three Wall Street professionals. The move gives the United States Attorney almost unlimited time to seek the new, broader indictment he has promised.

LEAD: AS Alfred Steffen lay on an operating room table in Pittsburgh last year, his body rejected the heart that had just been transplanted. Dr. Bartley P. Griffith of Presbyterian-University Hospital gave Mr. Steffen's wife, Joy, a choice: let her husband die or permit doctors to implant an artificial heart until a second human heart could be found.

LEAD: Federal health officials said today that they had learned of three cases in which health care workers became infected with the AIDS virus after their skin was briefly exposed to blood from infected patients.