Lower oil, broker downgrades lead HK shares down 2.4 pct

* Chinese property stocks tumble on broker downgrade

* Commodity-linked shares hit by lower oil, stronger dollar

* China Cosco plunges to 15-month low on falling freight index (Updates to close)

By Parvathy Ullatil

HONG KONG, Sept 10 (Reuters) - Hong Kong's share index dropped 2.4 percent on Wednesday to just off a 17-month low, as falling oil prices walloped commodity-linked stocks and Chinese property shares slumped on more broker downgrades following grim August sales figures.

China Overseas Land (0688.HK: Quote, Profile, Research, Stock Buzz) tumbled 11.5 percent after its sales revenue in August fell 40 percent from July and 28 percent from the same month last year.

CLSA cut its rating on the stock to sell from outperform as it expected more aggressive price cutting in the Chinese property sector.

China's once red-hot property market has been faltering since the end of last year as the economy shows signs of slowing, cooling speculative purchases in high-end urban areas.

"We believe price correction in coming months will be substantially more than what we had originally expected," said Nicole Wong, an analyst with CLSA.

"We lowered our property price forecast to a 20-30 percent correction, from the previous 5-15 percent correction."

Guangzhou R&F Properties (2777.HK: Quote, Profile, Research, Stock Buzz) fell another 8.4 percent after Tuesday's steep losses after CLSA downgraded the company to sell from underperform. Credit Suisse issued a warning about falling sales and property prices on Tuesday.

The benchmark Hang Seng Index .HSI closed down 491.33 points at 19,999.78.

The index gave up almost all the gains made in Monday's 4.3 percent rally, triggered by the federal takeover of troubled U.S. mortgage giants Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) and Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz), and is just shy of its 17-month closing low of 19,933.28 hit on Sept 5.

"The market tumbled following a string of broker downgrades amid hardly any fund flows," said Alex Tang, research director with Core Pacific-Yamaichi International.

"Locally-listed Chinese shares did not even react to China's surprisingly low inflation numbers because inflation is not the main concern now. Investors are more worried about earnings downgrades."

Earlier on Wednesday, data showed China's consumer price inflation in August fell to a 14-month low of 4.9 percent.

Analysts see the forecast-beating drop in inflation opening a window for China to raise energy prices and rest its aggressive credit tightening stance.[ID:nPEK352156]

Mainboard turnover rose to HK$65.3 billion ($8.4 billion) from HK$47.9 billion on Tuesday.

The China Enterprises Index .HSCE of top locally listed mainland Chinese firms fell 3.1 percent.

Gold miner Zijin Mining (2899.HK: Quote, Profile, Research, Stock Buzz) plummeted 9.3 percent to an 18-month low of HK$3.89 after gold prices sank to their weakest in nearly a year as a stronger dollar and lower oil prices triggered a second day of heavy selling.

Retreating oil prices also sent Asia's largest oil & gas producer, Petrochina (0857.HK: Quote, Profile, Research, Stock Buzz), down 3 percent while offshore oil producer CNOOC (0883.HK: Quote, Profile, Research, Stock Buzz) dropped 5.4 percent.

"Funds are still fleeing the equity and commodity markets into bonds. The sell-off in global commodity stocks will continue," said Castor Pang, strategist with Sun Hung Kai Financial.

China Cosco (1919.HK: Quote, Profile, Research, Stock Buzz), the nation's largest shipping conglomerate, plunged 13 percent to a 15-month low, tracking a 4.3 percent drop in the global freight index overnight.

The Baltic Dry Index .BADI, which gauges changes in the price of shipping commodities, fell for a 15th straight day amid deepening worries over a global economic slowdown.

(Reporting by Parvathy Ullatil; Editing by Ken Wills)