China banks, property lead HK shares down 1.5 pct

* China banks tumble on Goldman Sachs downgrade

* Chalco tumbles to 22-month low on margin erosion concern

* Chinese property firms drop on weak sales outlook (Updates to close)

By Parvathy Ullatil

HONG KONG, Sept 9 (Reuters) - Hong Kong shares gave up 1.5 percent on Tuesday after gaining the most in nearly six months in the previous session, as Chinese banks slid on a Goldman Sachs downgrade of the sector and mainland property firms tumbled on a weak sales outlook.

Goldman Sachs changed its stance on the Chinese banking sector to neutral from attractive as it sees further macro economic challenges in China including weakening investments, lower net exports and policy changes. Goldman also cut its earninsg estimates on the lenders by 6 percent to 7 percent.

China Construction Bank fell 1.6 percent after Goldman downgraded the stock to neutral from buy, while Bank of Communications , which was cut from neutral to sell, slid 4.3 percent.

Offshore oil major CNOOC dropped 3.5 percent as oil fell another dollar, back towards a five-month low, as a resurgent U.S. dollar drove investors away from commodities.

The benchmark Hang Seng Index .HSI ended 303.16 points lower at 20,491.11.

Mainboard turnover fell to a dismal HK$47.9 billion ($6.1 billion) from Monday's HK$68.4 billion.

The main index closed 200 points off its early low, as investors bought utlity stocks in the afternoon for their safe haven appeal. Hong Kong & China Gas jumped 2 percent while Hongkong Electric gained 1 percent.

"While short sellers are squeezing out gains from Monday's rally, other investors are standing by waiting for key economic indicators from the U.S. this week which will provide a clearer picture of which way the economy is headed," said Peter Lai, director with DBS Vickers.

Aluminum Corp of China tumbled 7 percent to HK$6.02, a 22-month low, after Deutsche Bank cut its target price on the stock to HK$5 from HK$8 on Tuesday citing further increase in production costs and downside to alumina and aluminium selling prices.

The brokerage also slashed its earnings estimates on the company by 24 percent for 2008 and 17 percent in 2009 on higher production costs.

The China Enterprises Index .HSCE of top locally listed mainland Chinese firms fell 2.8 percent.

Chinese property stocks took a beating after China's largest listed property developer, Vanke , announced a 35 percent drop in its August real estate sales.

Shares in Guangzhou R&F Properties tumbled 8.5 percent after Credit Suisse warned about the company's high-debt ratio and about potential property price cuts in Beijing and Guangzhou.

Shimao Property dropped 7.6 percent after Credit Suisse expressed concern about the company's near-term liquidity and low contracted sales.

The brokerage has a neutral rating on both stocks.

Greentown China slid 6.6 percent to HK$5.1.

China Shipping Development plunged 8.7 percent, tracking a 3 percent fall on the global freight index overnight.

The Baltic Dry Index, which tracks changes in the price of shipping commodities, has been on the decline for the past 14 sessions and has slumped more than 50 percent from its peak in May amid fears of a global economic slowdown.

China Communication Services , bucked the broad market trend, to rise 6.8 percent after reporting a 11 percent increase in its first half net profit on Monday.

Analysts expect the company to be a major beneficiary of increased capital expenditure in the Chinese telecom sector as the massive industry restructuring plays out. (Reporting by Parvathy Ullatil; Editing by Mathew Veedon)