HK shares sink 5 pct; lowest close since July 2006

* China banks, properties slide on slowdown worries

* Resources stocks slip on lower commodity prices

* Casino operators fall on Macau visa restrictions

(Updates to close)

By Parvathy Ullatil

HONG KONG, Oct 6 (Reuters) - Hong Kong shares dropped 5 percent on Monday to close below 17,000 points for the first time in more than two years, as China stocks sank despite fresh attempts by regulators to prop up the mainland market.

The decline gathered force in the afternoon session as investors were on their guard ahead of Tuesday's holiday in Hong Kong.

"There are no rules in this market, just a whole lot of uncertainty, which makes it difficult to predict where the decline will stop," said Howard Gorges, vice chairman with South China Brokerages.

Energy shares fell as oil prices tumbled nearly 4 percent amid a rout across the spectrum of commodities amid worries that a growing credit crisis would fail to stave off a sharper decline in oil demand.

Asia's largest oil and gas producer, PetroChina , slid 6.7 percent while offshore oil specialist CNOOC dropped 9 percent to a 14-month closing low of HK$7.58.

The benchmark Hang Seng Index .HSI ended down 878.64 points at 16,803.76, its lowest closing level since July 2006.

The Shanghai Composite Index .SSEC dropped 5.2 percent on Monday despite efforts by Chinese regulators to support the market, including the imminent launch of margin trading and short selling on a trial basis.

"Hong Kong outperformed other major markets last week, so we are playing a little catch-up now," said Alex Wong, director with Ample Finance Group.

The blue chip Hang Seng Index fell 5.4 percent last week as compared with a 7.2 percent drop on the MSCI Asia Pacific Index of ex-Japan stocks .MIAPJ0000PUS, while the Dow Jones Industrial Average .DJI slid 7.3 percent in the same period.

"Investors were disappointed to see China markets lower after the long holiday, but it's no surprise considering how much global markets have corrected in the meantime."

The China Enterprises Index .HSCE of top locally listed mainland Chinese firms dropped 6.6 percent to 8,416.90.

Chinese banks and property stocks tanked as analysts warned of cooling growth amid a global slowdown.

Top lender ICBC tumbled 5.3 percent while second largest lender China Construction Bank skidded 7.3 percent. China Overseas Land Investment gave up part of last week's rally on growth-favourable policies to slump 11.8 percent.

Resources stocks skidded, in line with falling prices of commodities. Gold miner Zijin Mining slumped 13.3 percent while China Coal Energy plummeted 12.9 percent.

China's largest shipping conglomerate China Cosco plunged 12.1 percent amid growing concern over slacking demand for commodities.

Asia's third largest air carrier Cathay Pacific slid 7.2 percent to its lowest in more than 5 years as analysts forecast waning demand for air travel from its premium customers.

Shares in Lenovo sank 4.1 percent after Merrill Lynch downgraded the world's No.4 PC maker to neutral from buy, citing a more tangible slowdown in U.S. demand for hardware and more persistent price pressure.

Macau casino operator Galaxy Entertainment plunged 10.5 percent on Monday on reports that the Chinese government was imposing further travel restrictions to the gambling haven, threatening growth at casinos.

The latest restriction, which took effect on Oct 1, limits Guangdong residents to only one visit to Macau every three months, instead of once every two months, according to local and Chinese media reports.

Other casino stocks also took a beating, with Melco International Holdings slipping 9.3 percent and Hong Kong-Macau ferry operator Shun Tak Holdings giving up 5.1 percent.

Macau's annual gross gaming revenues fell 3 percent in September from the year-ago period, the first annual drop since January 2006, according to a Citigroup report.

(US$1=HK$7.8) (Reporting by Parvathy Ullatil; Editing by Ken Wills)