THE market gave way to bargain-hunters yesterday as stocks fell across the board following Beijing's failed Olympics bid. Their buying helped cushion the fall as the Hang Seng Index dipped 55.95 points to 7,525.05. Turnover was a modest $3.08 billion, reflecting caution in the market. Seapower Securities research director Samuel Lau Kwok-leung said after the market fell in the morning, bargain-hunters moved in. ''The market recovered its lost ground on bargain-hunting,'' he said. Brokers expect the market to drift, with no major corporate news to stimulate it and given the prevailing gloomy political outlook. Barclays de Zoete Wedd sales manager Nial Gooding said: ''We are going to go through a rocky political situation. ''The only counter will probably be the airport issue as it is believed that we are very, very close to coming to some agreement.'' Mr Gooding said there were clear signs the austerity drive in China was beginning to bite. He pointed to the announcement by Guangdong International Trust and Investment Corp (GITIC) on Thursday that it had dropped plans to take control of Emperor (China Concept) Investments as a manifestation of the economic squeeze. He predicted: ''The spate of buying of Hong Kong companies by Chinese concerns is about to stop.'' While US buyers would continue providing liquidity by buying blue chips, they are not expected to drive the market much higher. Turnover of Hang Seng Index options fell from Thursday's record high to 2,746 contracts yesterday. On Thursday, speculation that Beijing would win the right to host the 2000 Olympics pushed the turnover of index options to a record 3,728 contracts. Chan Han-siong, manager for derivatives at HG Asia, said investors had ''gambled'' on Beijing's bid on Thursday and took a chance on the options market. While Beijing's loss could be partly blamed for the fall in options trading yesterday, he said uncertainties over Sino-British talks and the Russian crisis were also factors. As institutional investors became more familiar with and interested in options, trading of derivatives should increase further, he said. The September index futures fell 95 points to 7,465 to close at a 60.05-point discount to the cash market. Total contracts traded were 12,593. The market plunged 136.68 points in the morning after 15 minutes of trading, hitting an intra-day low of 7,422.65. The market regained 40.67 points in the next 15 minutes, then slowly retraced lost ground. It continued to claw back when trading resumed in the afternoon and closed the day having cut most of its losses. The conglomerates and commercial sector was the only Hang Seng sub-index to make gains, rising 0.41 per cent or 23.79 points to 5,758.61. Behind it was the property sector which lost 0.62 per cent or 71.95 points to 11,526.34 while the utility sector fell 1.01 per cent or 93.1 points to 9,118.19. The finance sector was the worst performer, falling 1.02 per cent or 72.52 points to 7,041.33. HSBC Holdings fell 50 cents to $80 on a turnover of $211.61 million. Mr Gooding said investors appeared to be switching out of HSBC to smaller banks because they felt the outlook for HSBC on the upside seemed limited. Stocks which rose on the back of Olympics optimism fell back yesterday. CITIC Pacific was off 30 cents to $17.20 while Tsingtao Brewery shed 35 cents to $5.75. Shangri-La Asia, which has several hotels in China, fell 25 cents to $6.70. Hongkong Telecom lost 20 cents to $12.50 while Hongkong Electric was down 30 cents to $20.80. Jardine Matheson Holdings fell $1 to $61.50. Hong Kong Aircraft Engineering Co rose $1.25 to $39.75.