Shares of Ltd fell nearly 8 percent to a two-month low early on Friday morning after sources said parent Alibaba Group is seeking up to $4 billion in debt financing, expected to help it buy back a 40 percent stake from Yahoo Inc. fell to as low as HK$7.20, the weakest intraday level since December 3 before recovering to trade down 2.3 percent by 0215 GMT, underperforming the Hang Seng Index's 1.7 percent loss.

The loans will be more of the parent company's issue, so I doubt it will have much impact on the listed unit. That's why the shares recovered some losses, said Alan Chan, a director of financial services firm Taishan Capital.

On Thursday, sources told Reuters that Alibaba Group, which holds a 73 percent stake in the Hong Kong-listed company, was raising money to help the Chinese e-commerce giant buy back a 40 percent stake in the company owned by Yahoo Inc.

As Alibaba Group is private, there is no public figure on what Yahoo's stake is worth, although some analysts said earlier this year that it was worth at least $9 billion.

In November, Yunfeng Capital -- co-founded by Alibaba's Ma, U.S. private equity firm Silver Lake and other investors -- completed the purchase of a 5 percent stake in Alibaba Group worth $1.6 billion, implying that a 40 percent stake would be worth about $12-13 billion, according to Reuters' calculations.

(Reporting by Lee Chyen Yee; Editing by Chris Lewis)