HK shares reverse losses in biggest pct jump in 11 yrs

* HSI posts biggest percentage gain in 11 years

* HSBC rallies 20 pct, its biggest gain since Oct. 97

* China properties mauled after Vanke earnings disappoint

* Kowloon Development sheds 41.7 pct on investment losses

(Updates to close)

By Parvathy Ullatil

HONG KONG, Oct 28 (Reuters) - Hong Kong shares soared 14.4 percent on Tuesday, clawing back Monday's losses and notching up their biggest one-day gain in 11 years after a five-day, 28 percent rout rendered valuations attractive, encouraging investors to snap up bargains.

Shares in Europe's largest bank, HSBC (HSBA.L), led the charge with a 20 percent jump, its biggest single day percentage gain since October 1997. It had shed 25 percent of its market value in the previous two sessions on growing signs of trouble in emerging markets. The stock closed at HK$90 on Tuesday.

"The markets were completely oversold on Monday. With the Hong Kong market being one of the last bastions for pure short selling we saw a lot of funds dumping U.S. dollar-linked assets and switching to home currencies," said Peter Lai, director with DBS Vickers.

"But today we saw the return of short covering, especially from long-term funds which find a lot of value in this market."

But shares in property developer China Overseas Land Investment (0688.HK) slid 8 percent after Shenzhen-listed China Vanke (200002.SZ) posted a 13 percent drop in third-quarter earnings and said it would not meet its previously set profit target.

Guangzhou R&F Properties (2777.HK) plunged 12.6 percent, building on Monday's massive 22.3 percent slide as support measures from the government failed to restore investor confidence in the sector. The stock fell to a new life low of HK$2.43 on Tuesday.

The benchmark Hang Seng Index .HSI closed up 1,580.45 points at 12,596.29, after it plunged 12.7 percent on Monday.

But the main index is still 60 percent off its all-time high hit last October and down 55 percent so far this year, and market watchers reckon the bottom remains elusive.

"We don't know whether this is the fabled 'capitulation' because we have no idea just how far the hedge fund sector has to shrink," said HSBC analysts led by Kevin Gardiner, head of global equity strategy.

"...as we'd feared, there are few places to hide: the notion of 'decoupling' was always wishful thinking in a globalised equity market, and portfolio liquidation is further making a mockery of many sectoral and regional analyses."