The "news" coming out of Isfahan today made it seem like nothing less than civil war had erupted.

What actually took place in this scenic city in central Iran could be a case history of rumor gone wild, an illustration of the incredible exaggerations that make if increasingly difficult for reporters to tell fact from fiction in trying to explain the confusing events in Iran these days.

By midday, reports coming out of Isfahan said martial law forces were firing on crowds in response to anti-government rioting the day before.

Opposition sources, hospitals and even some "independent" contracts were quoted as saying that at least 40 people were dead and the hospitals were jammed with more than 600 seriously injured. They said police and troops shot at cars displaying photographs of the exiled religious opposition leader, Anatollah Ruhollah Khomeini.

Other reports said crowds had been fired on by helicopter gunships and pitched battles were going on between pro-and anti-shah demonstrators.

What did happen was this:

During the morning, martial law troops swept through the streets firing their weapons into the air. They were using what sounded like special explosive ammunition, since the reports from their automatic weapon were much louder than normal.

The shooting had the desired effect. It cleared te streets of potentially hostile crowds, allowing the authorities to bring in truckloads of progovernment demonstrators from surrounding villages. The army, the police and up to 2,000 demonstrators then staged rallies in support of Shah Mohammad Reza Pahlavi as soldiers stood guard and continued to fire into the air sporadically through the afternoon.

Reliable sources in Isfahan reported no shooting deaths today although as many as nine people were said to have died from wounds suffered yesterday. In late afternoon a mob made an abortive attempt to attack the headquarters of the secret police, SAVAK. They were repelled by sporadic rounds of gunfire.

Some three hous laater the army took the offensive to disperse the rioters, opening fire with machine guns and automatic weapons.

As for the massacre that was alleged to have occurred today, I was in the streets where it was supposed to have taken place and I did not see any bodies, any blood on the streets or any other signs of it.

I apparently was the only Western reporter actually in Isfahen today.

At a square opposite an old stone bridge across Isfahan's Zayandeh River, I watched as army trucks rolled up loaded with soldiers in combat gear and pro-shah demonstrators waving placards with pictures of the shah and his wife and son.

Demonstrators painted over anti-shah slogans on a stone pedestal from which an opposition mob on the day before had toppled an equestrian statue of the shah.

They wrapped green, white and red bunting-the Iranian national colors-around the base and the top of the pedestal, tore down the pictures of Khomeini that had been stuck on top of it and replaced them with posters

Other demonstrators carrying sticks and metal bars harangued motorists to honk their horns and join their shouts of "Long live and shah." They gave motorists black and white pictures of the shah to tape on their windshields. Those who refused risked having their cars smashed.

Soldiers and policemen joined the demonstrators while guarding them against attack by opposition groups. Many soldiers carried clubs, steel bars and lenghts of cable instead of their automatic rifles. Others held their weapons perched on their shoulders and fired terrifyingly loud bursts into the air every once in a while.

Relatively few Iranians came out of their homes to watch and fewer still joined the activites. Most onlookers watched impassively from a distance. Some who did join in were enthusiastic. One woman wearing a chador, a traditional full-length veil, shrieked, "I told you the shah would have his day" and ran to the curbside waving and shouting "Long live the shah."

But no more than about 100 people, including those brought in from the countryside, were demonstrating at the square and many of those appeared to be under 12 years old.

Similar small but noisy rallies took place in different parts of the city. This was compared with the huge anti-shah processions the previous two days in which an estimated 100,000 took part.

The whole impression was of a rather pathetic attempt to rally the populace but an attempt that produced more noise and fear than genuine pro-shah feeling.

Earlier in the day, as troops fired nosily into the air and army helicopters circled overhead, soldiers stopped cars that displayed pictures of Khomeini of had their headlights on-popular signs of opposition.

The cars were searched and the offending drivers and passengers often were pulled out and beaten or forced to lie on the ground for long periods.

Troops smashed the windshields and headlights of many vehicles driven by shah opponents, or pounded in their roofs with clubs.

"There was rough handling of property but no deaths," said a well informed Western official here of today's incidents. He said none of the injuries from beatings was critical.

"The military tried to give people their head," he said, by allowing protest marches to go ahead over the last two days despite a martial law ban. But, he added, the result was rioting in which four statues of the shah were pulled down, a bank and two movie theaters were burned and a number of other places stoned.

"Now the military leaders here are feeling that the people have betrayed them, and they have imposed strict discipline," the official, who is in close touch with Iranian authorities, said.

The message seemed to be that thearmy woudl fight fire with fire. Certaintly, the troops looked more like an unruly mob as they rode through the streets and tried to undo the work of the anti-shah demonstrators.

Soldiers and their civilian supporters apinted out anti-shah slogans and pictures of Khomeini on the 400-year old Bridge of 33 Arches in the center of town. They rode on the hoods of jeeps and private cars, yelling pro-shah slogans. One soldier sat, legs dangling out of a bus window, swinging a lenght of rubber-coated cable.

How was all this blown out of proportion, with accounts of mass executions, violent clashes between opposing groups and firing from helicopter gunships?

Partly thourgh the rumor mill that seems to churn out one exaggeration after another and partly through the oppositions's apparent desire to make a bad situation seem worse.

Experienced reporters here are finding that once reliable sources are increasingly falling victim of these twin failings to the point that very little information from them can be trusted any more.

The government is often guilty of the same sins and has neglected any serious effort to give credible information of its own in recent months, although, in an indication that it feels it has little to hide, the government has scheduled a press flight-the first since the trouble began-to Isfahan tomorrow.

A major problem is with figures for such thing as casualties and crowd estimates.

During the protest marches here Sunday and Monday. Most Iranians questioned at street side put the number of demonstrators in the millions, although the entire population of Isfahan is a little more than 1 million. One march "official" even gave the figure of 6 million demonstrators.

Monday afternoon and evening as I watched a mob topple and burn a statue of the shah, a brief series of shots could be heard coming from the area of the local headquarter of SAVAK, the secret police. Youths running by shouted out progressively higher death tolls long after the shots had ceased..tOthers claimed helicopter gunships had opened fire, although the only ones I saw were merely circling, obviously on surveillance missions.

Another example of exaggeration here is the tale of the "martyr of Isfahan" a university student who was fatally shot by security forces. According to the legend that has built up around him he was wounded in the hand while writing an anti-shah slogan on a wall, but continued writing with his own blood until an officer, came up and shot him in the stomach. He died in a military hospital.

Only the fact of his death can be independently confirmed. As is often the case here, the rest may be embellishment, but the tale nevertheless serves to embolden other youths.

Even people one would normally not consider susceptible to rumors seem to get swept up in the present atmosphere.

An American woman attached to Bell Helicopter Co., the biggest U.S. company in Iran, warned me quite seriously. "They've poisoned the water. Our security people have confirmed it." "They" meaning the anti-shah rioters who also have a grudge against Americans these days.

I drank the water anyway, and I am still alive.