Washington's Haft family yesterday dropped its $6.3 billion bid for Dayton Hudson Corp., saying it was caught in the same market turmoil that is killing several other takeover deals.

The plunging stock market appears to have stalled the takeover boom that has helped fuel Wall Street the past five years. In the past two days, several deals have been canceled, including proposed leveraged buyouts by GAF Inc. and Trans World Airline Inc. Meanwhile, Wall Street executives say Southland Corp.'s $5 billion buyout may have to be delayed. Texaco Inc.'s settlement talks with Pennzoil Co. may also be affected.

"I think every deal is in trouble," David Wittig, managing director of Kidder Peabody & Co., said yesterday. "If a person is out there and in a position to rethink his position in a transaction, he's going to do that."

Future takeover deals also could become scarcer, financial experts said. Although the falling stock market has created some bargains for corporate raiders, a shrinking market in junk bonds -- risky securities that were used to pay for many takeovers -- could make buyouts more costly.

Herbert Haft and his son Robert have been aggressively pursuing Dayton Hudson since last June. In September, they bid $68 a share for the company.

But in a statement issued late yesterday the Hafts said "given current market conditions, {they} will not seek to acquire Dayton Hudson" or press ahead with a previously announced plan to launch a proxy fight to oust Dayton Hudson's board of directors.

Sources close to the Hafts said they could lose as much as $70 million after taxes from their investment in Dayton Hudson.

"At the present time, the markets are chaotic," added Robert Haft who with his father controls Dart Group Corp. "The capital markets are dried up. Now is not the time to be seeking to consummate such a transaction. Should the circumstances change, we are still interested in acquiring a retailer."

Haft said that his family, which bought about 4.6 million shares of Dayton Hudson stock for about $50 a share, sold about 1.4 million shares yesterday and planned to sell the remaining shares "depending on market conditions." Yesterday, Dayton Hudson stock was selling for as low as $23.50 a share before climbing up to $27.75 at the close of trading on the New York Stock Exchange.

"No one likes a loss, but we have a bright future," said Haft. "We have substantial resources, and it is certainly well within our capacity."

Dayton Hudson issued a statement yesterday saying it "welcomed Dart Group's decision not to go forward with a solicitation of shareholders." Company officials said they remain concerned about the disruption Dart Group has caused for the company as it pursued the takeover attempt.

The Hafts' decision to drop their contentious bid for Dayton Hudson came as several other takeover deals were canceled.

The volatile stock market "is going to force a lot of reevalutions of existing transactions -- the ones out there now and ones in the formative stage," said Hamilton James, managing director of Donaldson Lufkin & Jenrette. "The perception of values has changed. They have lowered. Many deals are premised on the ability to dispose unwanted assets at prices no longer achievable."

On Monday, GAF Corp. Chairman Samuel J. Heyman said higher interest rates made his proposed $66.50-a-share purchase of the company "no longer possible."

Yesterday, Trans World Airlines Inc. Chairman Carl C. Icahn withdrew his proposal to take the company private by paying shareholders not affiliated with him $20 in cash and $25 in face amount of 12 percent subordinated debentures. Icahn cited the change in market conditions. "The value of securities these days calls into question what our stock is worth," said Mark Buckstein, TWA's general counsel.

Also citing market conditions, the Great Atlantic & Pacific Tea Co. canceled its proposed $175 million takeover of Alabama-based Delchamps Inc.

Meanwhile, Dinner Bell Foods Inc. yesterday announced it had ended discussions on a proposed leveraged buyout by a group led by one of the company's corporate directors.

Wall Street sources also say that Southland's $5 billion leveraged buyout, which is scheduled to be completed in early November, may have to be put on hold until the market settles down. A Southland spokesman, however, said the company still was "continuing its efforts to proceed on schedule."

Additionally, Texaco Inc.'s Chairman Alfred DeCrane said the unstable stock market may influence the substance and value of possible talks to settle a multibillion-dollar judgment Texaco has been ordered to pay Pennzoil Co.

USAir Group Inc. of Arlington, on the other hand, said it did not plan to change its $1.6 billion takeover of Piedmont Aviation, which is now under review by the Department of Transportation. "We are committed to the price of $69 per share," said David Shipley, USAir's assistant vice president for public relations.

Merger and acquisition specialists were not all disheartened by the volatile stock market, noted Barry Friedberg, managing director of Merrill Lynch & Co. "I think the decline in share prices has been the best thing that has happened in the merger and acquisition business for some time. There are unprecedented opportunities to make acquisitions at big discounts," he said.

"We're looking very hard to create an opportunity out of this" said Minneapolis financier Irwin Jacobs. Nonetheless, Jacobs was concerned that there may be only a handful who can take advantage of the opportunities. "If it stays the way it is, America is going to be sold awfully cheap. But there are an infinitesimal amount of people who can take advantage of it."

Daniel Good, managing director and head of acquisition financing for Shearson Lehman Brothers, said, "Some of the people I'm talking to are interested in buying a company and look at this as a buying opportunity."

However, he noted that there are conflicting market forces that may make takeovers more difficult. "The junk-bond market has all but come to a halt as interest rates have escalated {in the past few weeks}, and there has been a flight to quality." That, coupled with rising interest costs, will make takeovers costly.

Some deals were still completed yesterday, nonetheless. A&W Brands Inc., which makes the nation's top-selling root beer, acquired Vernors, a Detroit soda company, for about $10 million. "I'm convincing myself it's only paper," said Lou Lowenkron, A&W's president and chief executive officer. Besides, he said, "The climb in soft drink consumption is steady. It doesn't go down when we have tough recessionary times."