  We present results from a Chandra observation of the NGC346 cluster, which is
the ionizing source of N66, the most luminous HII region and the largest star
formation region in the SMC. In the first part of this investigation, we have
analysed the X-ray properties of the cluster itself and the remarkable star HD
5980. But the field contains additional objects of interest. In total, 75 X-ray
point sources were detected in the Chandra observation: this is five times the
number of sources detected by previous X-ray surveys. We investigate here their
characteristics in detail. Due to high foreground absorption, the sources
possess rather high hardness ratios. Their cumulative luminosity function
appears generally steeper than that for the rest of the SMC at higher
luminosities. Their absorption columns suggest that most of the sources belong
to NGC 346. Using DSS data and new UBVRI imaging with the ESO 2.2m telescope,
we also discovered possible counterparts for 32 of these X-ray sources and
estimated a B spectral type for a large number of these counterparts. This
tends to suggest that most of the X-ray sources in the field are in fact X-ray
binaries. Finally, some objects show X-ray and/or optical variability, with a
need for further monitoring.
