HONG KONG -(Dow Jones)- Li & Fung Ltd. (0494.HK) fell sharply Tuesday after the consumer goods exporter sold HK$2.68 billion (US$344 million) worth of shares in a placement Monday.

At 0328 GMT, Li & Fung was down 8.5% at HK$21.95, while the Hang Seng Index was down 0.35%. The stock has risen 16.9% since April.

Li & Fung said it placed 120.3 million shares at HK$22.55 each, a 6.0% discount to its closing price Monday of HK$24.00.

The shares were sold at the low end of an indicative price range of HK$22.55 to HK$23.28 each, according to the term sheet seen by Dow Jones Newswires Monday.

UBS said in a research note the share placement came as a surprise to the market, because the company had just raised US$500 million in September. The new share issuance will dilute earnings by roughly 3.5%, it said.

UBS said any potential outsourcing deals the company will sign to supply other brands has been fully reflected in the stock's recent rise, and investors ought to take advantage of share price rises to sell the stock.

Li & Fung said in a statement the proceeds of the placement will primarily be used for general working capital and to support the company's continued business expansion.

-By Jackie Cheung, Dow Jones Newswires; 852-2802-7002; jackie.cheung@ dowjones.com

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  05-04-092351ET
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