STOCKS tumbled further yesterday as investor apathy kept buyers away. The Hang Seng Index fell 1.37 per cent to close 120.57 points lower at 8,679.13. Volume was $3.18 billion while share turnover was 623.85 million on 28,036 shares traded. Despite the low volumes, traders said much of the selling was real, rather that related to hedging or arbitrage operations. ''People are realising this market just keeps going down and down,'' said one US broker. Brokers said a Jardine Fleming report advising investors to reduce Hong Kong stocks from an overweight position to a neutral one was partly to blame for the poor sentiment. Jardine Fleming has been a heavy seller this week in both futures and cash markets. It has traditionally been one of the strongest supporters of the market and has huge funds invested through its unit trust division. While the brokerage is just one of many to have downgraded the market this year, that it has chosen to do so when the market is already almost 30 per cent off its peak shows just how bearish it has become. Many retail investors have been hoping for a rebound in prices, and the current low levels seem an enticing entry level for many who recall the giddy heights above 12,000. However, Jardine Fleming's retreat signals that there may be even more selling to come and that any chance of a rally in the coming months is small. The psychological effect of one of Hong Kong's biggest backers backing away is likely to be felt in trading this week. Until its re-rating it was the only brokerage of any size to be overweight in Hong Kong stocks. Now that Jardine Fleming has revised Hong Kong downwards there is little institutional support left, and in such an indifferent environment it will be difficult for the market to regain its lustre. The biggest danger in the Jardine report is that the index may face a fund manager-driven meltdown, where falling prices erode money managers' patience and they decide to sell out. Jardine Fleming head of Hong Kong research Alex Ho said there were some positive factors which could come into play later in the year. These include the renewal of China's most-favoured-nation trading status, talks resuming on airport funding and an expected interest rate increase on May 17, which should be the last for some time. But these events were too far away to impact on investors' decision-making at the moment. Mr Ho said if world markets did recover, Hong Kong would be a major beneficiary because it had been hit hardest during the interest rate-sparked fall. Barclays de Zoete Wedd assistant director Nial Gooding said: ''People who were stabbing at situations on the way down lost money. Hongkong Bank looked a good buy at $90, but it has now fallen further, so they are reluctant to take large positions.'' Trading moved in a 249-point range yesterday from 8,822.28 to 8,572.79. The market opened the morning down and kept moving that way although it did offer some weak resistance at the 8,700 level before closing the session down 151.23 points at 8,648.47. Afternoon trading saw the market continue to fall through the 8,600 level before bouncing off the day's low just before closing. Hutchison Whampoa again led the fall, dropping 80 cents to close below the $30 mark at $29.70. Cheung Kong slipped 25 cents to $35.25. HSBC fell 50 cents to $83.50. Wharf was the biggest loser among the conglomerates, falling $1 to $28.