HK shares drop most in two weeks led by blue chips

* HSBC sinks in global bank stock sell-off

* China Mobile drops after first quarter earnings

* Gold miners buck trend on safe haven appeal (Updates to close)

By Parvathy Ullatil

HONG KONG, April 21 (Reuters) - Hong Kong shares marked their biggest drop in two weeks, falling 3 percent on Tuesday as HSBC slid on a surge in bad debts at Bank of America (BAC.N) while China Mobile succumbed to selling pressure after its first quarter earnings.

Energy stocks pulled back sharply after crude oil slumped more than 8 percent overnight and stayed depressed on Tuesday amid a rising U.S. dollar and growing caution about the pace of recovery in the global economy.

Offshore oil specialist CNOOC (0883.HK) dropped 5.3 percent, while Asia's top oil and gas producer PetroChina (0857.HK) shed 3.2 percent.

Coal stocks joined the retreat with China Shenhua (1088.HK) down 1.7 percent and China Coal Energy (1898.HK) shrinking 4.5 percent.

The benchmark Hang Seng Index .HSI ended down 465.02 points at 15,285.89.

Shares worth HK$57.5 billion had changed hands compared with Monday's HK$57.1 billion.

Despite the slowdown in turnover from last week's daily average of more than HK$70 billion, market watchers believe there is further upside to the market.

"Institutional flows have been very strong in the past few weeks and if you just look at Hong Kong and China, corporate earnings and economic data seem to be improving," said Steven Leung, director with UOB Kay Hian.

"So even if there is a big sell-off in the near term, the market may bounce right back because there are enough institutional buyers waiting to enter this market at a more attractive level," he said.

Others also warned of a pullback in the short-term, saying the market looked overbought from a technical viewpoint.

"From a long-term perspective, however, most technical indicators remain positive. Most notably, when we look at volume from the standpoint of momentum, we see a recognisable level of buying activity," Winnie Ma, analyst with BNP Paribas, said in a note.

Europe's top bank HSBC (0005.HK) retreated 5.1 percent to HK$52.15, while Standard Chartered (2888.HK) pulled back 5.1 percent after Bank of America raised doubts about the sustainability of the recent earnings bonanza from U.S. banks.

Shares in the U.S. lender plunged 24 percent despite the bank reporting a rise in profit after its chief executive warned the bad credit environment was getting worse.

The other index heavyweight, China Mobile (0941.HK) slid 5.1 percent to HK$70.50 after its first-quarter earnings growth slowed to 5 percent, prompting analysts to lower their earnings forecasts on the world's largest wireless service provider.

JPMorgan cut its 2009 profit estimate by 4.8 percent and that for 2010 by 9 percent to factor in lower usage and revenue-per-user assumptions. Intensifying competition and its rural market thrust is also seen clouding China Mobile's outlook further.

Local utility stocks bucked the downtrend to edge up as investors turned to defensive plays including Hongkong Electric (0006.HK), up 2.1 percent, and CLP Holdings (0002.HK) which was up 1.1 percent.

Another big gainer was Sinopec Shanghai Petrochemical (0338.HK), which soared 7.8 percent, building on its recent gains after reporting a sharp reversal in its fortunes. The refiner swung to a 164 million yuan profit in the first quarter from a 200 million loss a year ago as international crude oil prices slumped .

The China Enterprises Index .HSCE of top mainland companies was 2.1 percent lower at 9,039.09.

Gold miner Zhaojin Mining (1818.HK) advanced 8.5 percent, while Lingbao Gold (3330.HK) climbed 6.1 percent as the price of the precious metal jumped overnight with the slump in global stock markets boosting its safe-haven appeal.

(Editing by Jacqueline Wong)