HK shares finish 1.4 pct higher in late rally

* Esprit tanks after euro zone Q1 GDP drops

* Energy stocks track lower crude oil prices

* Turnover slips further as investors await bigger correction

(Updates to close)

By Parvathy Ullatil

HONG KONG, May 18 (Reuters) - Hong Kong shares reversed course to finish 1.4 percent higher on Monday led by Chinese counters after the Shanghai market rose in a bout of late-session buying while local property stocks jumped on hopes of a recovery.

Bucking the trend, Esprit (0330.HK), the world's No.6 fashion brand by market capitalisation, slipped 2.5 percent on concern over its earnings outlook in its core markets in Europe, in particular Germany, which constitutes half of its revenue. [ID:nLF318161].

In Hong Kong, a key Asian market for Esprit, the economy shrank 4.3 percent in the first quarter, the biggest contraction since records began in 1990, following a plunge in exports and private consumption.

Merrill Lynch lowered Esprit's rating to "underperform" from "buy" on doubts its business would recover in the next 12 months.

The benchmark Hang Seng Index finished 232.21 points higher at 17,022.91 led by a 2.9 percent jump in China's second largest lender, China Construction Bank (0939.HK).

The index had ended the morning session 1.3 percent lower.

Turnover rose to HK$66.4 billion ($8.5 billion) from Friday's HK$58.1 billion.

"The afternoon bounce on the Shanghai market seems to have triggered another wave of funds-led buying in H-shares," said Peter Lai, director with DBS Vickers.

"There is still plenty of liquidity waiting to come into Hong Kong so it's probably difficult to see a big correction unless there is some really bad news from the U.S. or China," he said.

Bourse operator Hong Kong Exchanges & Clearing (0388.HK) was among the top gainers, jumping 5.8 percent to HK$109.70 on hopes that the China recovery story will keep funds flowing into the territory's stock market. Goldman Sachs upgraded the stock to buy from neutral on Monday, with a target price of HK$124.

Property stocks notched up big gains on expectations that home prices in Hong Kong are poised for a strong recovery.