HONG KONG, Nov. 27 (Xinhua) -- Fresh subprime-related concerns sparked by HSBC's billions of bailout of two structured investment vehicles (SIV) sent Hong Kong's benchmark index sharply lower in early trading Tuesday, though the losses later narrowed on strong bargain-hunting interest.

The benchmark Hang Seng Index fell 416.41 points, or 1.5 percent, to 27,210.21 after dropping to a low of 26,637.61 in the morning session.

H-share index, which reflected the performance of state-owned companies registered in the Chinese mainland, moved down 2.06 points, or 400.62 percent, to 19,049.49.

Turnover rose to 120.07 billion HK dollars (15.44 billion U.S. dollars) from Monday's 110.14 billion HK dollars (14.18 billion U.S. dollars).

Analysts said they expect the blue-chip index to remain volatile in the next few sessions ahead of the expiry of November futures contracts, but they expect it to regain more of this month's decline in December.

Overnight, the Dow Jones Industrials Index fell 1.8 percent to 12,743 as continuing woes in the financial sector offset early positive signs in the retail market. Banking heavyweight HSBC said it will provide up to 35 billion U.S. dollars in funding to bail out two of its SIVs that contain residential mortgage-backed securities, as a liquidity crisis to fund these kinds of vehicles deepens.

HSBC fell 2.0 percent in Hong Kong to 130.90 Hong Kong dollars, leading other banks to fall as well.

Hang Seng Bank dropped 2.1 percent to 139.30 Hong Kong dollars and Bank of East Asia fell 1.5 percent to 47.20 Hong Kong dollars.

Though HSBC said it does not expect a material earnings impact as a result of the bailout, JP Morgan, a famous financial services in the world, said in a research note it believes any credit losses on the two SIVs would eventually be borne by HSBC shareholders. As such, the investment bank expects HSBC's earnings to remain under pressure. Despite the negative credit market developments, analysts said they expect a broad recovery in Hong Kong stocks next month.

China Mobile ended the day down 1.6 percent at 132.70 Hong Kong dollars.

Bank of China was the day's biggest blue-chip decliner, after Singapore's Temasek Holdings confirmed it was selling up to 572 million U.S. dollars worth of the bank's shares. Bank of China fell 5.2 percent to 4.02 Hong Kong dollars.