STOCKS closed lower for a second day yesterday as rumours of a planned share placement by HSBC eroded investor confidence. The Hang Seng Index closed 34.91 points down at 9,863.98, a loss of 0.35 per cent. At one stage it had fallen as much as 127.45 points to 9,771.44. Turnover was healthy at $5.79 billion, up from the revised $4.01 billion for Wednesday. This included the one-off $2.2 billion share placement by Henderson Land Development. Volume was lower, with 1.32 billion shares changing hands. Tai Fook Securities research manager Elton Cheung said: 'The market was quite volatile. It was pressured by a placement of new shares by Henderson yesterday and rumours that Hongkong Bank was planning a placement today. 'Confidence is so fragile that people started dumping HSBC.' Later in the day it appeared the placement was actually being made by a Japanese bank and this helped HSBC and the market to regain most of their earlier losses. HSBC had fallen as much as $2.50 to $113.50 before recovering to close just 50 cents down at $115.50. The news of the rumoured placement dragged the market down sharply at the opening. The index slid from the previous close of 9,898.89 to as low as 9,780 before finding some support. It spiked back up before again drifting lower to reach lunch at 9,826.19, an intra-day fall of 72.70 points. The afternoon saw another slide as futures selling pulled stocks lower. The index fell to the day's low at 3pm before bargain hunting pushed it sharply higher to the close. Individual stocks were mixed. Among the 33 blue chips, 15 rose, two closed unchanged and 16 headed lower. Properties led the market down with the Hang Seng sub-index dropping 105.12 points to 16,979.80. Henderson Land Development fell 70 cents to $46.10 after confirmation of its $2.2 billion share placement. The stock lost $1.30 on Wednesday. Most other property counters followed Henderson lower. Great Eagle fell 45 cents to $20.15, New World Development lost 30 cents to $32.40 and Sun Hung Kai Properties slipped 25 cents to $61.25. Banks also headed lower with the Hang Seng finance sub-index falling 46.26 points to 9,716.49. HSBC weighed the sector down the most while the banks were mixed. Hang Seng Bank fell 50 cents to $68 while Bank of East Asia rose 10 cents to $27.95. Utilities were also mixed as Hongkong Telecom slipped but the other counters rebounded. The Hang Seng utilities sub-index edged up 0.53 points to 9,948.34. Telecom fell 10 cents to $13.55. Other utilities were stronger. Hongkong Electric rose 40 cents to $25.25, China Light & Power added 10 cents to $36 and Hongkong and China Gas climbed five cents to $12.65. Commercial and industrial counters were mostly lower with the Hang Seng sub-index falling 15.07 points to 7,362.43. Conglomerate Swire Pacific led all stocks in net loss, falling 75 cents to $59.25. Johnson Electric also tumbled, falling 70 cents or 4.57 per cent to $14.60. Brokers said its upcoming interim results were not expected to be pleasing. Second and third liner counters enjoyed some activity as speculators looked away from the blue chips for profits. Recent listing Pacific Plywood was again actively traded, gaining 10 cents or 8.13 per cent to $1.33. A total of 21.46 million shares of the Malaysian-based plywood manufacturer were traded. China Everbright Securities research director Samual Lau said: 'There are rumours that the shares are going to go up even higher in the next few days.' Computer components maker Suwa International saw healthy gains after announcing a sharp rise in interim profit. Suwa rose 2.5 cents or 6.25 per cent higher at 42.5 cents. Wholesaler and retailer Dickson Concepts rallied after its 15.4 per cent growth in interim profits. The stock added 45 cents to $6.15. H shares continued to drift lower with the Hang Seng China Enterprises Index dropping 4.55 points to 767.45 points. Looking ahead, brokers see the market ready to end its consolidation phase and make good its recent losses. Dao Heng Securities dealer Low Kok-keong said: 'It seems like the index is holding up at the 9,800 level. 'If there is an interest rate cut next week that could provide an excuse to push the market above 10,000.'