US, EUROPE EASE TRADE TENSION The looming trade war between the United States and the European Community deescalated a notch yesterday as trade negotiators from both sides agreed to press toward resolution of a transatlantic government procurement dispute, the Monitor's Howard LaFranchi reports. Following the first of two days of talks in Brussels yesterday, US Trade Representative Mickey Kantor said the US will hold off on application of sanctions against the EC until the two sides meet again in Washington April 19 and 20. EC Commissio n Vice President Sir Leon Brittan agreed to begin the process of rescinding a new procurement regulation that favors EC bidders in government contracts. While Sir Leon sounded more optimistic than Mr. Kantor about eventual resolution of this and other US-EC trade disputes, both sides said they also made progress in discussion of market-access issues. Fuel spill in Virginia

Diesel fuel from a ruptured pipeline in Herndon, Va., flowed down a rain-swollen creek into the Potomac River yesterday, contaminating wetlands rich in wildlife and threatening water supplies. "It's a major inland oil spill," said Kevin Coop, emergency response coordinator from the Environmental Protection Agency. Hundreds worked late Sunday trying to skim the fuel from the surface of Sugarland Run and stem the flow into the Potomac, which runs through Washington, D.C., and provides drinking water for hu ndreds of thousands of people. Personal income rises

Americans' personal income increased only modestly in February but their spending held strong, the government reported yesterday. Income rose 0.2 percent to a seasonally adjusted annual rate of $5.23 trillion, following a gain of 0.5 percent in January and a strong 1 percent jump in December. Phone sales jeopardized

The US Supreme Court yesterday allowed states to ban businesses from telephoning consumers and making unsolicited sales pitches using automatically dialed, recorded messages. The court, without comment, rejected arguments that such a Minnesota ban violates free-speech rights. Although the court's action is not a ruling that sets a national precedent, its practical effect is to leave states free to restrict such telemarketing. And most states do.

Arming teens debated

Right-wingers in Israel yesterday assailed Prime Minister Yitzhak Rabin's idea that high school students use clubs to ward off knife attacks while liberals backed it, a turnabout in the usual attitude toward use of force. The debate reflected mounting frustration with a wave of attacks that has left 10 Israelis dead since mid-February, mostly in individual stabbings or shootings.In addition, 25 Palestinians have been killed in the unrest, triggered largely by the stalemate in Mideast peace talks. Israel shut the occupied Gaza Strip yesterday in response to the fatal stabbing Sunday of an Israeli. US troop cut planned

US Deputy Defense Secretary William Perry told European colleagues in Brussels yesterday that the US government plans to cut troops in Europe to 100,000. Mr. Perry gave no timetable for the reduction of US troop levels on the continent from the current 187,000.Kingmaker released

Former Japanese kingmaker Shin Kanemaru, charged with massive tax evasion, was freed on $2.57 million bail yesterday after three weeks of interrogation in a widening scandal over how he amassed his fortune. 2,000 flee Srebrenica

More than 2,000 women, children, elderly people and sick and injured war victims packed a UN convoy yesterday to flee hunger and cold in the eastern Bosnian Muslim enclave of Srebrenica. The refugees made their escape as the longest truce of Bosnia's brutal year long war held for a second day.

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