UPDATE 1-Alibaba erases gains, hit by growth concerns

(Recasts, adds analyst comment)

HONG KONG, May 7 (Reuters) - Shares in China's top e-commerce firm, Alibaba.com Ltd (1688.HK: Quote, Profile, Research, Stock Buzz), erased early gains to fall 2 percent on Wednesday as concern over its premium customer growth and the impact of a slowing global economy offset enthusiasm over its forecast-beating quarterly results.

Alibaba, in which U.S. Internet firm Yahoo (YHOO.O: Quote, Profile, Research, Stock Buzz) is a key investor, had dropped 2 percent to HK$15.08 by 0311 GMT after rising 5 percent to HK$16.16 shortly after the market opened. The loss lagged a 0.5 percent drop in the benchmark index .HSI.

It reported late on Tuesday a net profit of 300.7 million yuan ($43 million) for the first quarter, beating forecasts, and more than double the 142.1 million yuan earned in the same period in 2007. [ID:nHKG356954].

But Cazenove downgraded the stock to underperform from outperform on Wednesday due to its stretched valuations, a slowdowon in the global economy and weaker Chinese exports.

"Paying member growth decelerated due to the company's sales force restructuring and the momentum is not likely to resume until the third quarter," it said in a research note.

Cazenove revised down forecast earnings by 9 percent and 20 percent, respectively, for 2008 and 2009.

Brokers also said the stock lacked short-term catalysts after Microsoft (MSFT.O: Quote, Profile, Research, Stock Buzz) walked away from its bid to buy Yahoo.

Microsoft's offer early this year had lifted the valuation of Internet firms, including Alibaba, although the management of the Chinese online-business-platform operator said such a move would be neutral to the company.