ECONOMY

Treasury-note yields increased on two-year government notes to an average of 8.19 percent, the highest since 8.41 percent on June 26, the Treasury Department said.

COMPANIES

VLSI Technology, a California-based chip maker, will lay off 5 percent of its non-manufacturing work force and will leave the memory chip business over the next few months because of stiff competition, low profit margins, high manufacturing costs and expensive research and development.

US Sprint will market its long-distance services through Premier Telecom Products, a manufacturer of telecommunications equipment.

Biospherics, based in Beltsville, has reached an agreement with the Department of Agriculture to test a new, nontoxic pesticide for use in the poultry industry. Development of the pesticide, still a couple of years away from market approval, represents an attempt by the environmental services firm to branch into the biotechnology industry.

MGM Grand said it has retained Bear, Stearns & Co. to sell the Desert Inn hotel and casino in Las Vegas.

ACQUISITIONS

Meredith Corp. said a federal court has refused to block the sale of its printing business, to R.R. Donnelley & Sons Co., the leading commercial printer in North America, but the Federal Trade Commission is appealing on antitrust grounds.

INTERNATIONAL

The IMF announced its first loan to El Salvador in eight years, a $50 million, 12-month financial operation to support the government's economic program.

The European, a weekly newspaper launched in May, exceeded the 225,000 circulation guaranteed to advertisers in June and July, Publisher Robert Maxwell said. Maxwell said weekly sales were estimated to be 360,000 in June and 340,000 in July.

Fiat said it would temporarily lay off 35,000 of its 116,000 factory workers because of sharper-than-expected declines in European auto sales during the second quarter.

REGULATION

A federal appeals court ruled that the Interior Department unfairly took uranium mining leases from Annapolis-based UNC in 1978. The appeals court sent the case back to U.S. Claims Court to determine damages.

CONTRACTS

Fluor Corp. won a contract worth more than $200 million to upgrade an oil refinery operated by Valero Refining. The California construction giant also won a $50 million contract to engineer and help build and manage a copper ore and molybdenum processing plant 200 miles north of Santiago, Chile.

All Nippon Airways ordered $580 million in GE aircraft engines for 17 747 airplanes, GE said. GE also received an order worth more than $200 million for four gas turbine engines from Korea Electric Power Corp.

Computer Sciences Corp., a Falls Church-based computer services company, won a 10-year, $49 million contract to modernize the computer systems that support the Treasury Department's Financial Management Service bureau.

PEOPLE

Ernest Saunders, former chairman of Guinness PLC, was ordered jailed for five years, and co-defendant Anthony Parnesa was given 2 1/2 years in jail, in the illegal share-support scheme that underpinned the brewer's 1986 takeover of Distillers. Heron International chief Gerald Ronson was ordered to serve a year in jail and fined $9.6 million plus $844,000 in court costs.

Donald Trump has pledged his 27.2 percent stake in New York department store chain Alexander's Inc. as collateral for his $65 million financial rescue from casino and bank debt, documents filed with the SEC disclosed.

Jack O'Donnell, who quit as Trump Plaza Hotel and Casino president because of a dislike for Donald Trump, was named to run Merv Griffin's Resorts Casino Hotel.

A soybean broker, James D. Nowak, changed his plea to guilty just two weeks before he was to have gone on trial in the government's probe of suspected fraud at the Chicago futures exchanges. Nowak, a key witness in the case, pleaded guilty to racketeering conspiracy and filing a false federal income tax return.

William A. Wilson stepped down as head of Carrier Corp. amid slumping sales at the maker of air conditioning and heating equipment. Wilson will be replaced by Karl Krapek, president and chief operating officer of Otis Elevator, which, like Carrier, is a subsidiary of United Technologies.

Robert V. Royall Jr., a vice chairman of Citizens & Southern and head of the C&S Community and Corporate Banking Group, said he plans to retire Dec. 31. The company has not yet named a successor.

Charles H. Keating Jr., the former chief of the failed Lincoln Savings who is facing the possibility of being cited for contempt of court, filed an accounting of his personal finances with federal regulators, a day after missing a court-imposed deadline to do so.

ODD LOTS

Nabisco and Eskimo Pie introduced new fat-free food products. Nabisco said it will begin marketing a cracker next month that has zero grams of fat per half cup, or five crackers, and Eskimo Pie launched a fat-free dessert that company officials hope will double the firm's share of the frozen novelty market.