August 28, 1992

Lydia Suarez cried yesterday as she stared at the storefront pocked by bullets, the sidewalk stained with blood, the Spanish-language newspapers recounting the wild shootout outside her apartment building in the Bronx early Wednesday morning that left two of her daughters wounded, with one of them paralyzed. Three months ago, she had only heard the shots that wounded her son, Angel, in a robbery, but this time, she had watched from a fire escape. For Mrs. Suarez, life at 871 Longwood Avenue in Hunts Point had finally become unbearable.

Political Crisis in Japan A long-smoldering scandal claimed Japan's most powerful politician and created a crisis for the Government. The politician said he had accepted a $4 million contribution and resigned his ruling party positions. Page A7. Pretoria to Reform Police The South African Government announced sweeping reforms of its police force, clearing the way for the first black generals. Page A10. California Nears a Solution It has taken two extraordinarily painful months, but it appears that California is now on the verge of enacting a state budget. Page A12. Mets Deal Their Ace The New York Mets averted a multi-million-dollar, free-agent showdownwith David Cone, their best pitcher, by trading him to the Toronto Blue Jays. Page B9.

Air Canada and two powerful Texas financiers made a bid of $400 million yesterday to buy Continental Airlines, and the offer may touch off another bidding war for the bankrupt carrier. The offer was made by Air Canada and Air Partners L.P., a Texas limited partnership led by David Bonderman and James Coulter, who are associated with the billionaire financier Robert M. Bass. But although both men have made major acquisitions with him in the past -- including the purchase of Bell & Howell for $900 million -- a spokesman for Air Partners said Mr. Bass was not taking part in the current bid.

Senator Alfonse M. D'Amato doesn't have a Republican primary to worry about. He doesn't know who his Democratic opponent will be in November. But he is already campaigning, trying to position himself for the political fight of his life. He has been on a tear around the state, spreading news of some Federal largesse, and his role in procuring it -- $2 million to renovate the pediatric wing of a Buffalo hospital, $440,000 to expand the Women's Rights National Park in Seneca Falls, $11.2 million from the Aquatic Nuisance Prevention and Control Act for the Great Lakes. Reacting to Sag in Polls

The groups that run programs in the New York City schools on how to avoid AIDS were in open rebellion yesterday against the Board of Education's insistence that they pledge to emphasize abstinence over safe sex in classroom presentations. More than 40 of the 200 AIDS education groups have refused to sign the pledge and most of the others are expected to do the same, a spokeswoman for the groups, Terry Lewis, said.