HSBC's share price is continuing to feel the effects of a ''whispering campaign'' in London's financial district in recent weeks suggesting the bank's British subsidiary is carrying big losses on its bond trading operations. Its share price under-performed the Hang Seng Index and finance sector of the index this week in the wake of publicity in London surrounding the operations of Midland Global Markets, the money markets arm of HSBC's subsidiary Midland Bank. Senior Midland officials have emphatically denied speculation of large losses, said to be up to GBP1 billion (about HK$11.48 billion), and have launched an internal investigation into the source of the rumours. The story which filtered into the Hong Kong markets last week contributed to HSBC's share price finishing 4.35 per cent down on the week, according to brokers. The HSI fell 3.9 per cent over the same period and the finance sector was down 3.2 per cent. Ben Kwong, senior analyst with G. K. Goh, said: ''Despite the Midland denial the story has affected the share price of the bank. Speculation such as this always leaves a degree of uncertainty in people's minds.'' Unfounded rumours about losses at Midland's treasury operations, one of the biggest in London, first surfaced about five weeks ago. Anonymous faxes, some of them from within Midland bank, were then sent to several newspapers including the Sunday Times, which published a story about the so-called ''whispering campaign'' last week. The faxes alleged Midland was about to suffer a defection of key staff in the wake of the earlier departure of four senior executives. A spokesman for HSBC in Hong Kong reiterated Midland's explanation that the four who had left were ''completely unconnected'' with the performance of Midland Global Markets' trading operations. Spokesman Bob Sherbin would not comment on the bond trading activities of Midland Global but said that trading within HSBC as a group was ''profitable and comfortable''. Midland Global manages treasury operations for both Midland and HSBC, dealing bonds, gilts and money market operations. A spokesman for Midland said yesterday the investigation had not tracked down the author of the faxes and that at this stage police had not been called in. The plunge in the bond markets earlier this year has sparked widespread speculation about Treasury operations among both public companies and banks. Barclay de Zoete Wedd research head Philip Mok said it was possible that Midland Bank had lost a certain amount of money in the bond market between February to March this year and and this was one of the reasons for HSBC's share price underperforming. The best indication of the Treasury trading operations will not be known until August when HSBC and group subsidiaries present their interim results.