Hong Kong share prices dropped yesterday to their lowest levels for almost a month as uncertainty about Japanese economic reforms hurt confidence on most regional stock markets. The Hang Seng Index finished at 8,099.2 points, a drop of 1.29 per cent, after touching a low of 7,912.23 in the morning. A plunging yen rattled the regional markets early but Japanese Prime Minister Ryutaro Hashimoto's decision to resign in the afternoon prompted a partial recovery. The market opened more than 50 points higher after lunch and held the gains through the afternoon session. Indosuez WI Carr Securities director of sales trading Tom Leventhorpe said the market was hoping that a new Japanese political regime would show a greater commitment to reform. 'It's all about general sentiment in Asia,' he said. ING Barings director of sales James Osborn said uncertainty about the domestic situation in Japan had damaged regional sentiment. 'It really has caused a lot of jitters in Asian markets,' he said. He said long-term investors were unwilling to enter the Hong Kong market because they were concerned the mainland was becoming caught up in the regional crisis. 'There is no danger with this market of missing the rally,' he said. The Hang Seng Index's previous low of 7,526.45 was set on June 16. Cathay Pacific Airways continued its recent glamour run, rising 4.65 per cent to $6.35 amid strong foreign buying. Brokers said European investors were buying on the belief that Cathay was about to announce an equity deal with British Airways, or at the least, an alliance. One broker said it was unlikely that Swire Pacific or Citic Pacific would be willing to sell down their stakes in the airline, meaning that any equity tie-up would involve the issuance of new shares, most likely 10 per cent or less. Another broker said investors were opting for stocks with tangible assets such as Cathay rather than banks or property counters. Hang Seng Bank fell 3.33 per cent to $40.60, while parent HSBC dropped 0.82 per cent to $180.50. The red-chip index shed 1.44 per cent to 829.98 points and the H-share index dropped 4.03 per cent to 403.9 points. The index futures market was relatively quiet, with volumes in the July and August contracts totalling 22,351 lots. The July contract lost 110 points to 8,080 and August fell 90 to 8,070. Cash market turnover was $4.05 billion, much better than last week's daily average of $3.5 billion. KEY FIGURES Close: 8,099.2 (- 106.57) Turnover: $4.05 bln Volume: 2.35 bln shares Day's high: 8,113.8 Day's low: 7,912.23 Advanced: 97 Declined: 364 Unchanged: 510 July futures: 8,080 (- 110) August futures: 8,070 (- 90)