ECONOMY

T-bill yields fell. The Treasury auctioned 13-week bills at an average discount of 7.39 percent, down from 7.49 percent last week, and 26-week bills at an average discount of 7.36 percent, down from 7.48 percent.

Private stock offerings dropped in the first half, according to IDD Information Services. Domestic stock offerings volume fell 32 percent in the first half to $56.8 billion from $84.1 billion in the same period a year ago.

Construction spending climbed 0.4 percent in July, mainly because of spending on nonresidential buildings, the Commerce Department reported. The July advance follows revised declines of 0.9 percent in both June and May.

A New York Stock Exchange seat sold for $301,000, matching a sale last month at the lowest level in more than 5 1/2 years.

COMPANIES

Arco, the first oil company with a low-emission gasoline, said it would announce another low-polluting fuel this week.

Campeau Corp. said its Federated Department Stores and Allied Stores units reported losses of more than $50 million for July and August.

Philips NV of the Netherlands said will eliminate 4,000 jobs and discontinue several operations in its money-losing components division.

Florsheim shoes will be offered in separate display areas in at least 300 Sears stores by next year under a joint venture agreement.

Johnson & Johnson sued Bristol-Myers Squibb to halt an ad campaign that claims aspirin-free Excedrin is a better pain reliever than J&J's extra-strength Tylenol. J&J said that since both drugs contain the same dose of the pain reliever acetaminophen, they are equivalent pain relievers.

John Morrell & Co. faces a fine of $345,125 for allegedly hiring illegal aliens and failing to verify that its meatpacking employees were eligible to work, the government announced.

Kellogg's Heartwise cereal was embargoed by the Texas Health Department, which accuses the company of deceptive labeling over the cholesterol-fighting claims of its psyllium-based product. The cereal has led to a controversy over whether the grain psyllium is a food or drug.

COURTS

American and United airlines tabled their dispute over schedules at Chicago's O'Hare International Airport, pending a decision from the Federal Aviation Administration. A federal court hearing had been set for yesterday over whether to bar United from operating under new flight schedules at O'Hare. American contends United's proposed schedule is misleading to passengers.

Edwin T. McBirney III's bank fraud trial was delayed until February. The indictment accuses McBirney, former chairman of Sunbelt Savings Association of Texas, of promising another thrift a $6 million profit on one transaction in return for help in financing a $700 million real estate deal.

Washington Ventures, the venture capital subsidiary of Washington Bancorporation, filed for federal bankruptcy protection, saying it had liabilities of $4.6 million and an undetermined amount of assets.

PEOPLE

Archibald Cox Jr. was named president and chief executive of First Boston Corp., the securities unit of CS First Boston Inc. He joined CS First Boston in April.

Manuel Johnson, former Federal Reserve vice chairman, has joined the consulting firm of Smick Medley International as senior partner. The firm will be renamed Johnson Smick Medley International.

Martin Riley Jr., a Chicago Mercantile Exchange currency trader, pleaded no contest one day before he and 14 of his colleagues were due to go on trial on charges of illegal trading practices.

Harvey Lamm resigned as chairman and chief executive of Subaru of America, which merged last week with Fuji Heavy Industries. Lamm was replaced as chairman by Takeshi Higurashi, Fuji's managing director in charge of Subaru's overseas business.

Leonard Tucker, former chairman and part-owner of F.D. Roberts Securities, a defunct Paramus, N.J.-based penny-stock brokerage, pleaded guilty to a federal racketeering charge in connection with illegal and unethical practices to manipulate stock prices and bilk investors.

ODD LOTS

The Greyhound drivers union halted $50-a-week in strike benefits because, it said, the six-month-old dispute has already cost it more than $6 million.

J.C. Penney said its stores are removing from their shelves a line of boys clothing that carry labels with anti-hunting messages. The firm responded after complaints from sportsmen's groups.