July 12, 1989

LEAD: THIS town (population 103) 15 miles east of Iowa City is not a place that springs to mind in connection with vegetarian food. Deep in Iowa's pork belt, surrounded by fields of corn and alfalfa that climb in the summer sun, Downey looks like real meat-and-potatoes country, where people tackle midday dinner with gusto and then have pie for dessert.

LEAD: The Exxon Valdez has brought her owners a cargo of new woes, raising doubts today about where she can dock for repairs.

LEAD: Japanese officials said tonight that Prime Minister Sousuke Uno would announce to leaders of the major industrialized democracies this week a $43 billion package of grants and loans to improve the global environment and to spur economic growth in countries crushed by poverty and indebtedness.

LEAD: It has been more than a year since Edward R. Byrne, a rookie police officer, was killed on a Queens street while guarding the home of a drug-case witness, making him a martyr at least to his fellow police officers and Mayor Edward I. Koch.

LEAD: Time Inc. plans to begin publication in February of Entertainment Weekly, a magazine that will be its most ambitious magazine venture since faltering with TV Cable Week, Picture Week and Discover.

LEAD: It's poetry, Hollywood style, every Tuesday night at Cafe Largo as the likes of Judd Nelson, Justine Bateman, Robert Downey Jr. and Patti D'Arbanville recite poetry - their own and others' - to S.R.O. crowds.

LEAD: The Bush Administration has told Israeli political leaders that it hopes the Labor Party will not leave the coalition Government in Jerusalem, American officials said today.

LEAD: American League Wins The American League's first two batters, Bo Jackson and Wade Boggs, hit home runs in a 5-3 All-Star Game victory. Page A17. Mexican Vote Tensions In an action criticized as ''selective democracy,'' Mexico's Government has conceded an opposition victory in one state but not in another.

LEAD: In a vigorous appeal to thousands of workers at a shipyard in Gdansk, Poland, President Bush today urged the Solidarity movement to shed ''the legacy of distrust and shattered dreams'' and to pull together with the Communist Party to create a brighter Poland.

LEAD: The Offer for B.A.T.

LEAD: The ideals of the French Revolution may have been liberty, equality and fraternity, but most French citizens in 1789 were probably more preoccupied with eating. In fact one of the revolution's lasting legacies was the rise of the French restaurant.

LEAD: Laurence Olivier, hailed as one of the greatest classical stage actors of his time, died yesterday at his home near London. He was 82 years old.