(Adds background, shares, company spokeswoman)
HONG KONG, June 22 (Reuters) - Shares in Evergrande Real Estate (3333.HK) fell more than 4 percent early on Friday, extending a sharp slide in the previous session, and China's second-largest property developer by sales said it was considering legal action against Citron Research, a short seller which alleged it was insolvent.
Evergrande bonds shed 1.3 basis points on Friday, with its 2015 bonds opening at 90.1 cents on the dollar. They, too, were hit hard on Thursday, with the 2015 bonds down 7 basis points. According to Thomson Reuters data, Evergrande has outstanding bonds of around $2.8 billion.
Around $1 billion was wiped off the company's value on Thursday when its shares fell 11.4 percent after a report from U.S.-based Citron Research accused Evergrande of financial irregularity and bribery. [ID:nL3E8HL1UA]
In a Friday note, Barclays Capital said there was "still no clarity on whether the (Citron) accusations are true or false," even after Evergrande hosted a conference call late on Thursday to reassure investors.
Chairman Hui Ka Yan, who owns 63 percent of Evergrande, said on the Thursday call that the company has 13 billion yuan ($2 billion) of cash on hand, sufficient to cover its operations. "The other side's accusation is absurd, and we are very, very angry," Hui told investors.
Evergrande denies Citron's accusations, and has said it would not revise its forecast for annual sales of 80 billion yuan. The company said it is organizing a team of lawyers to defend itself against the accusations.
A spokeswoman for Evergrande said the company will issue a formal response to Citron's report via later on Friday.
By 0220 GMT, Evergrande shares were trading down 1.8 percent at HK$3.91. Hong Kong's properties and construction index .HSCIPC was down 0.3 percent.
($1 = 6.3642 Chinese yuan)
(Reporting by Alex Frew McMillan; additional reporing by Jonathan Rogers; Editing by Ian Geoghegan)
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