THE plunge in Hong Kong stock prices continued yesterday, as the market was left reeling by Wall Street's second overnight dive. Ominously for the rest of the world's markets, the Dow Jones Industrial Index was down 36 points to 3,641.99 - or almost one per cent - an hour into the afternoon's trading in New York. Despite an early attempt by Hong Kong stocks to rally in London, the unofficial index compiled by Robert Fleming fell further. Following a slump of 372.40 points or 4.16 per cent to 8,576.03 in the Hang Seng Index, the Fleming Index closed a further 29 points down at 8,547. The Hong Kong closing level was the lowest since July 11 when it hit 8,394.94. Yesterday's plunge - which at one time saw the index down to 8,389.02 - was the biggest single-day fall in points since March 21 when the index slumped 465.28 points. Among the big blue chip casualties yesterday were Hutchison Whampoa down $1.80 to $31.40, Cheung Kong off $1.10 to $33.30 and HSBC which dropped $2.75 t o $85.50. The rush to sell was led by overseas institutions, especially those based in the US. 'People in the US perhaps decide bonds are more attractive than equities. We tend to follow,' said Kleinwort Benson's head of derivative sales Simon Gard. But brokers reported that local small investors were standing firm, and in some cases stepping in to pick up bargains. One broker with Golden Harvest and Co said the number of investors buying stocks exceeded those selling off by at least one-third. 'They took the opportunity to buy in when the market was at a low point,' he said. Nevertheless, the market plunge was powered by brisk trading. Turnover of $5.9 billion was the highest in more than two months, indicating the strength of selling. Analysts said prices would continue to take their cue from Wall Street which fell more than 90 points overnight, and was expected to stay weak today. 'It was pretty bad in the morning and better in the afternoon,' said South China Brokerage managing director Howard Gorges. Early yesterday morning, the Hang Seng Index collapsed within the first 15 minutes to the day's low of 8,389.02, a drain of 559.4 points from Tuesday's 8,948.43 close. 'The free fall was a shock to people,' Mr Gorges said. Yesterday, a plunge in Hang Seng Index futures, which traded at a discount to the spot market most of the day, tended to join forces to squeeze the local spot market. In the afternoon, the land auction results which turned out as expected and had no real effect on the market. On the market's outlook, Mr Gorges said the performance could fluctuate from day to day depending on Wall Street, the bond market and US strategists. Mr Gard was cautiously optimistic, adding that the Thanksgiving holiday in the US might give the index a breather. Should Wall Street post no considerable fall in coming days, he said, the local market could have a rebound of within 100 points. Brokers expected a trading range of 8,300 to 8,800 in the short term. Mr Gard did not expect a traditional year-end rally after the six US Federal Reserve rate rises during the year.