UPDATE 2-Kohlberg Capital withdraws proposed offering; stock up

(Adds analyst comments, share movement)

BANGALORE, Sept 10 (Reuters) - Kohlberg Capital Corp (KCAP.O) said it has withdrawn a proposed offering of 4.5 million common shares, citing general stock market conditions and unusual trading activity in its stock, sending its shares up 12 percent.

"It appears that shareholders thought that the stock offering was too dilutive and that's what was driving down the stock last week," Oppenheimer & Co analyst Robert Simmons said. "So, when they pulled the offering, the stock bounced back."

On Sept. 3, the business development company had said it expects to raise $46.2 million in net proceeds from the proposed offering, or $53.2 million if underwriters' option was exercised in full.

Shares of the company rose $1.10 to $10.33 in afternoon trade on Nasdaq. They had shed 16 percent over the past week before Wednesday's gains. (Reporting by Ratul Ray Chaudhuri and Supantha Mukherjee in Bangalore; Editing by Deepak Kannan)