January 19, 1989

LEAD: The dollar surged yesterday, ignoring the negative economic news in the widening trade deficit and another round of central bank intervention.

LEAD: The South Street Seaport would take a big step northward, with the transformation of two gritty old waterfront blocks into a fancy new stretch of shops, offices and apartments, under an agreement announced yesterday between New York City and two private developers.

LEAD: One day after Gov. Mario M. Cuomo made public his $46.6 billion state spending plan, many state lawmakers and local government officials said that if the plan were enacted, New Yorkers would be spared increases in their state taxes only to see them show up on their local tax bills.

LEAD: The Securities and Exchange Commission and Drexel Burnham Lambert Inc. are at an impasse over how to settle the charges of securities law violations against the firm, a person directly involved in the case said yesterday.

LEAD: Each day hundreds of people stop briefly just inside the reservation here near the shore of Lake Erie. Most are truck drivers or cigarette smokers looking for bargains.

LEAD: Mayor Xavier Suarez said today that he regretted his handling of an incident that helped touch off race-related violence that continued this evening for a third night, and he issued a public apology to the police.

LEAD: The price of West Texas Intermediate crude oil climbed to $19.26 a barrel yesterday, its highest level since November 1987. The 31-cent increase in the spot contract on the New York Mercantile Exchange was spurred in large part by sharply higher gasoline prices.

LEAD: ''YOU'RE the top! You're the Colosseum,'' the song lyric goes. But the Colosseum stands only 160 feet tall, and the forgotten-but-not-gone New York Coliseum is a mere 102. With apartment buildings climbing 50, 60 and even 70 stories, the top is closer to the clouds than the Romans or Cole Porter ever dreamed.

LEAD: THE ECONOMY The Federal Reserve said it would allow banking companies to raise money for corporations in the bond market. The decision breaks down part of the wall that has separated banking and the securities business since 1933 - the Glass-Steagall Act. [ Page A1. ] The nation's trade deficit widened substantially in November, to $12.5 billion, as exports declined and imports surged to the second-highest level on record, the Commerce Department reported.

LEAD: If the new offerings here at the 89th National Housewares Show are an indication of public sentiment, Americans are yearning for products to organize their homes and home offices.

LEAD: The Supreme Court, ending a year of turmoil in the lower Federal courts, today upheld the new Federal system for sentencing convicted criminals.

LEAD: Stock prices rose sharply yesterday as the Dow Jones industrial average reached another post-crash high.