THE market made marginal gains yesterday in mixed trading, but activity was quiet with Japan on holiday. The Hang Seng Index gained 16.24 points to close at 9,862.64, a gain of 0.16 per cent. Volume was quiet at $3.92 billion. Trading was featureless with a lot of short-covering coming from local players who sold the market off on Wednesday afternoon. Brokers said part of the selling on Wednesday could have been related to people front-running the China inflation report, which showed last month's inflation at its highest level for six years. However, the expectation that it would affect sentiment never materialised. 'I called my clients and they just ho-hummed the inflation figure,' said an American trader. 'The sellers shorting the market on Wednesday were hoping to precipitate more selling yesterday, but it didn't happen,' the broker said. Europeans remained sidelined, but there was some net buying coming from the United States, although it was on low volumes. Jardine Fleming Futures head of derivatives research Virginia Mumford said the morning session saw a lot of local short-covering, but the afternoon saw some genuine buying from local investors. 'People are looking at local political risk with [British Foreign Secretary] Douglas Hurd's visit,' she said. 'We still have concerns on the market, but the picture is terribly mixed with some overseas brokerages rumoured to be downgrading.' Brokers said Hong Kong was again waiting for world markets to take a view on US inflation and interest rates. If New York had a good day, Hong Kong might be able to break back above the 10,000 level. Said one broker: 'If there are positive markets . . . we could have a strong day. 'People are relatively short in the market and it could force them to cover.' From a technical point of view the market was looking reasonably well supported at the 9,800 level. It had twice tried to break below 9,750 but failed, giving some brokers confidence that the worst might be over. But not all brokers agreed that the market was set to retrace its path back above 10,000. One sales director said she saw more net selling from fund managers yesterday who were switching from Hong Kong into Malaysia and Thailand. 'I think there is still more downside because there is nothing to induce the buyers back in.' She said that with most of the corporate reporting season out of the way there was unlikely to be any more big news to give the market a boost. The disturbance of Dairy Farm delisting also added to the sense of confusion in the market, and buyers would continue to sit it out, she said. Holding the market back yesterday was HSBC, which was heavily sold off on concerns that the rate rise in Britain would affect lending margins. The counter slid below the $90 level before closing at $90. Rumours that Singapore-listed Cycle and Carriage was interested in buying Jardine International Motor Holdings (Zung Fu) helped boost interest in that stock. Zung Fu closed five cents higher at $10.50. Analysts expected it would be the only Jardine group stock not to delist, primarily because it was the distributor of Mercedes-Benz in Hong Kong and it would make little sense listing in Singapore. Trading moved in an 80-point range from 9,862.88 to 9,782.71. Hutchison Whampoa gained 30 cents to $37.70, while Cheung Kong edged up 10 cents to $39.20.