LEAD: After a series of telephone calls that began before dawn, President Reagan decided today to remain at his Camp David retreat rather than return to the White House to deal with the shooting down of an Iranian airliner by an American warship.

Scattered U.S. Aides Link Up by Phone On Airliner Incident

LEAD: The downing of an Iranian jetliner is striking evidence of how split-second decisions in modern warfare may be based on incomplete electronic information.

Failures Seen in Safeguards on Erroneous Attacks

LEAD:  Blimp Contract Under Study  The F.B.I. and the S.E.C. are investigating the rivalry between two military contractors for a $168.9 million contract to build a blimp. Page 10.  Rain at Wimbledon  The men's singles final between Boris Becker and Stefan Edberg was suspended by rain in the first set.

INSIDE

LEAD: Because of holiday production requirements, The Times is printed today in two sections. SportsMonday begins on page 34, Business Day on page 29.

HOLIDAY BOX

LEAD: Jammed rush-hour traffic, once the bane of the big city, has become a pervasive part of daily life in the suburbs around New York City.

Traffic Threatens Economy Of Suburbs Around New York

LEAD: The downing of an Iran Air passenger plane by American missiles yesterday prompted comparisons to the destruction of a South Korean airliner shot down by a Soviet fighter pilot nearly five years ago.

Similarities With KAL Flight Are Rejected by U.S. Admiral

LEAD: A United States Navy warship in the Persian Gulf shot down an Iranian passenger plane today that the Navy said it mistook for a jet fighter, and Iran said all 290 people on board were killed.

290 REPORTED DEAD; A TRAGEDY, REAGAN SAYS; ACTION IS DEFENDED

LEAD: A debate has erupted in the State Department over whether the United States should counter a recent decision by the Israeli Cabinet that would require most Jews who leave the Soviet Union to settle in Israel.

Israeli Decision On Emigre Curb Splits U.S. Aides

LEAD: It was a battle for the hearts, minds and souls of thousands of traditionalist followers of Marcel Lefebvre, the dissident Archbishop who was excommunicated Thursday.

Two Churches in Paris Battle Across the Lefebvre Schism

NEWS SUMMARY

LEAD: ''After receiving further data and evaluating information available from the Persian Gulf, we believe that the cruiser U.S.S. Vincennes, while actively engaged with threatening Iranian surface units and protecting itself from what was concluded to be a hostile aircraft, shot down an Iranian airliner over the Strait of Hormuz.

Quotation of the Day

LEAD: Along the railroad tracks, where Francuska Street climbs gently, stand tenements encrusted with neo-classical flourishes that do not want to remain standing.

Katowice Journal; Bad Times (and Machines) Undercut Coal Capital

LEAD: A riot erupted in the Old City of Jerusalem this morning when Israeli authorities began excavating an ancient canal near the Western Wall and Al Aqsa Mosque, among the holiest sites for Jews and Moslems.

Arabs Riot in Jerusalem Over Archeological Dig

LEAD: When Mikhail S. Gorbachev toured his carefully crafted landscape of economic and political change with 5,000 delegates to the Communist Party conference in Moscow last week, he trod terrain that seemed familiar to many Chinese.

China Nods Sagely at Soviet Changes

LEAD: An anecdote in the Metropolitan Diary column of The Living Section on May 4 about a train trip from Connecticut to New York City misstated the approach to Manhattan taken by Amtrak trains from the northeast.

Corrections

LEAD: Secretary of State George P. Shultz's visit to Central America last week appeared to be a renewed effort to isolate Nicaragua at a time when the Reagan Administration is perceived to be weakening and its policy toward the Sandinistas is seen to be in disarray, according to diplomats and government officials in the region.

Shultz's Aim: Isolating Sandinistas?

LEAD: A picture caption last Friday about an exhibition at the Metropolitan Museum of Art by the Puerto Rican artist Jose Campeche misidentified the painting shown. It was ''The Wife of Governor Dufresne.''

LEAD: About 400 women demonstrated here Saturday against the implementation of Islamic law by President Mohammad Zia ul-Haq. It was the second such protest in two weeks. Many women fear that the new code will negate 1961 laws that gave them the right to file for divorce or to demand the right to register marriages and divorces.

Women Protest in Pakistan

LEAD: Following is a transcript of the briefing conducted today by Adm. William J. Crowe Jr., Chairman of the Joint Chiefs of Staff:  OPENING STATEMENT

Statement by Joint Chiefs' Chairman: 'U.S. Deeply Regrets This Incident' . . . but Commanders on the Scene Believed 'Their Units Were in Jeopardy'

LEAD: Britain said today that it deeply regretted the deaths of those aboard an Iranian airliner shot down in the Persian Gulf this morning, and it endorsed Washington's explanation that American forces believed they were acting in self-defense when they fired on the jet.

The Downing of Flight 655; Britain Regrets Jet 'Tragedy' And Backs the U.S. Account

LEAD: Iran reacted to the American downing of an Iranian jetliner today by accusing the United States of barbarism and by hinting strongly that it would retaliate.

Iran Calls U.S. Action A 'Barbaric Massacre'

LEAD: Following is a chronology of U.S. involvement in the Persian Gulf in the last year and a half. According to the Center for Defense Information in Washington, a private group that monitors military matters, about 475 commercial vessels have been attacked in the gulf by Iranian or Iraqi forces since 1984.

The U.S. Navy in the Persian Gulf

LEAD: State Department officials said today that the shooting down of an Iranian passenger plane by a United States Navy warship would not lead to any fundamental change of American policy in the Persian Gulf.

The Downing of Flight 655; No Policy Changes in Gulf As a Result, State Dept. Says

LEAD: Following is the text of a statement by President Reagan today at Camp David, Md., on the shooting down of an Iranian airliner over the Persian Gulf. The statement was read at the White House by the President's spokesman, Marlin Fitzwater.<

The Downing of Flight 655; Text of Reagan's Statement

LEAD: The Iranian jetliner shot down in the Persian Gulf yesterday by an American warship apparently failed to observe many of the precautions deemed necessary in a war zone, according to Western aviation experts.

The Downing of Flight 655; Aviation Experts Assess the Incident

Angelique Monique-Paulette Boyer Rousseau, simply known as Angelique Boyer, is a Mexican actress. Among her most notable works is her participation in soap operas such as Rebelde, and Teresa.

Angelique Boyer, French-Mexican actress

Angelique_Boyer

Keith Adonis Franke was an American professional wrestler, better known by his ring name, "Adorable" Adrian Adonis. He was best known for his appearances with the American Wrestling Association and World Wrestling Federation throughout the 1980s.

July 4, 1988

Headlines from July 4, 1988

Scattered U.S. Aides Link Up by Phone On Airliner Incident

Failures Seen in Safeguards on Erroneous Attacks

INSIDE

HOLIDAY BOX

Traffic Threatens Economy Of Suburbs Around New York

Billboard 200

OU812

Faith

Hysteria

Dirty Dancing

Open Up And Say...Ahh!

Notable Births

Notable Deaths

Historical Context for July 4, 1988