UPDATE 1-Shares in defence supplier Hensoldt drop after market debut

* Shares open in line with issue price of 12 euros

* Second IPO in week in Germany in test of market (Updates with background, details, share drop)

FRANKFURT/MUNICH, Sept 25 (Reuters) - Shares in German defence supplier Hensoldt fell below their issue price on their first day of trading in Frankfurt on Friday, testing the market in Germany’s second initial public offering this week.

Shares dropped to 10.84 euros ($12.65) at 0738 GMT after initially opening at their issue price of 12 euros per share.

Hensoldt, whose high-tech cameras are used in Tornado fighter jets, priced at the lower end of an offered range of 12-16 euros per share range.

Earlier this week caravan maker Knaus Tabbert, which had also priced at the bottom of the range and cut the number of shares on offer, fell below its offer price when it listed.

Hensoldt, a former Airbus unit which also supplies radar for Eurofighter jets and periscopes for Leopard and Puma tanks, was bought by the private equity company KKR in 2016.

The deal values the company at 2.3 billion euros, including debt, with 38.3 million shares being sold.

KKR was set to hold more than 60% the company after the listing.

$1 = 0.8569 euros Reporting Tom Sims in Frankfurt and Alexander Huebner in Munich Editing by Michelle Martin