UPDATE 1-China stocks show signs of stability after slump

* Benchmark index opens lower but manages to rise slightly

* Valuations weaken sharply after an 18-pct, two-weeks slump

* 14-day RSI near overselling region

* Everbright Securities makes relatively subdued debut (Adds details, analysis)

SHANGHAI, Aug 18 (Reuters) - China's stock market showed signs of stability on Tuesday morning after tumbling 5.8 percent on Monday, its biggest daily percentage drop in nine months, hit mainly by profit-taking after a 90-percent stock market rally earlier this year got far ahead of China's economic recovery.

Among hot stocks, shares in China Everbright Securities Co (601788.SS), which raised 11 billion yuan ($1.61 billion) in its Shanghai IPO, opened 42 percent up in their Shanghai debut on Tuesday, at the high end of expectations but weaker than last month's sizzling debuts, due to the broadly weak market.

The Shanghai Composite Index .SSEC opened 0.88 percent lower at 2,845.335 points and managed to edge up, having dropped a combined more than 18 percent from its 14-month high of 3,478 points hit two weeks ago, also under pressure from worries about a flood of new shares and weakening overseas markets.

China's stock regulator said it would review on Friday an application by China CNR Corp, one of the country's top two train makers, for an initial public offering to raise around $1 billion to fund technical upgrades. [ID:nSHA218957]

The index was up 0.6 percent by 0228 GMT.

Analysts said the two-week slump had pushed valuations of China's stock market to much more reasonable levels now, and the potential of sliding would be more limited in the near term.

"Earlier this year, the index rose too much without a decent correction, and that caused a torrential fall recently," said senior stock analyst Zhang Qi at Haitong Securities.

"The pace of such a fall cannot be sustained, though we also do not expect the index to rebound sharply immediately, partly because of weakening overseas markets at the moment."

The index is seen moving in a relatively narrow range of 2,800 to 3,100 points in the coming one to two weeks, analysts said.

The latest slide pushed the average forecast price earnings (PE) of Shanghai A shares to 27 times from 32 times two weeks ago, according to Reuters calculations based on exchange data.

It also pushed the Shanghai index's 14-day Relative Strength Index (RSI) to nearly 30, considered oversold and meaning share prices should have limited room to fall sharply again in the near term, analysts said. ($1 = 6.83 yuan) (Reporting by Claire Zhang and Jacqueling Wong; Writing by Lu Jianxin)