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FIGHTING IN CHECHNYA REPORTED HEAVY Chechen antiaircraft guns fell silent yesterday after ammunition ran low, allowing Russian jets to bomb Grozny, the capital of the breakaway southern republic, in early morning raids. Heavy ground fighting was reported later in the day on the outskirts of the capital, with Moscow saying there were new Russian casualties. The renewed fighting came one day after hundreds of thousands of Chechens and other North Caucasus people linked hands over several miles to protest Moscow's military offensive in Chechnya. N. Korea to release body

North Korea agreed yesterday to release the remains of a the United States pilot who died when his helicopter went down in the Communist country, US officials reported. But there was no word on the release of another pilot who survived the incident and is being held by the North.

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The agreement came during a series of high-level meetings at the truce village of Panmunjom. In Washington, President Clinton said he hoped for the pilot's release by Christmas.

Shootdown charge dropped

The US Air Force has dropped negligent-homicide charges against an F-15 pilot in the downing of two Army helicopters that killed 26 people in April. But Lt. Col. Randy May could still face disciplinary action ranging from reprimand to dismissal, an Air Force spokesman said Tuesday.

Colonel May and his lead pilot, Capt. Eric Wickson, shot down the US helicopters over northern Iraq on April 14, mistaking them for Iraqi Hinds in violation of a no-fly zone. Wait till next year

Higher interest rates are on the way early next year, analysts say, even though the Federal Reserve has decided not to play Scrooge during the Christmas season. Private economists disagree on the size and frequency of future rate increases. But they say the economy is too strong and the danger of inflation too great for central bank policymakers to remain on the sidelines for long.

Army seizes Chiapas town

Heavily armed soldiers and police occupied a town in the southern state of Chiapas yesterday as Mexico's new president strove to show he can deal firmly with a resurgent Indian uprising. Soldiers and state police rolled into Simojovel late Tuesday. EU inflation low

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Annual inflation in the European Union was static at 3 percent in November, the lowest level since March 1987, the European Commission's Eurostat statistical service said yesterday.

It said France continued to have the lowest rate at 1.6 percent and all 15 current and future member states except Italy, Portugal, Spain, and Greece were below the EU average.

Dean Rusk

Former Secretary of State Dean Rusk, who went ``eyeball to eyeball'' with Moscow during the Cuban missile crisis and helped oversee America's ill-fated buildup in Vietnam, has died.

Mr. Rusk, the son of a poor Georgia farmer, served as secretary of state in the Kennedy and Johnson administrations. He died Tuesday night at his home in Athens, Ga., the University of Georgia said yesterday.

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