* China posts biggest gain in more than three weeks
* Hong Kong narrows losses after China gains (Updates to close)
By Jun Ebias and Claire Zhang
HONG KONG/SHANGHAI, Nov 2 (Reuters) - China's key stock index rose 2.7 percent on Monday, its biggest one-day gain in more than three weeks, as solid earnings and upbeat manufacturing data powered a sharp rebound from early weakness.
But the Nasdaq-style ChiNext market for start-up stocks, which began trade last Friday with a speculative surge, was broadly weaker as profit taking sent about two-thirds of its 28 stocks down by their 10 percent daily limit.
In Hong Kong, shares narrowed losses as gains in China encouraged some bargain hunting, but exporter Li & Fung slumped on gloomy U.S. consumer sentiment.
The Shanghai Composite Index ended at 3,076.649 points after sliding as far as 2,923.525, a nearly three-week intraday low, and below the closely watched 125-day moving average now at 2,940 points.
Gaining Shanghai A shares overwhelmed losers by 880 to 17, while turnover picked up to a one-week high of 154 billion yuan ($22.55 billion) from Friday's 117 billion yuan.
"The market is apparently being propelled by strong thrid-quarter earnings, with banks outperforming for that reason," said Zhang Qi, senior analyst at Haitong Securities in Shanghai. "But with negative factors looming, such as weak overseas markets, the market is not likely to stage a steady rally but will rise gradually amid volatility."
Shenzhen Development Bank jumped by its 10 percent daily limit to 24.73 yuan, while Ping An Insurance advanced 6.7 percent to 59.71 yuan.
The market earlier tracked losses in New York stocks, which on Friday posted their biggest one-day fall since July, but investors shifted their focus to the recovering Chinese economy.
HSBC's China Purchasing Managers' Index (PMI) for October, released in the morning, rose to an 18-month high of 55.4 from 55.0 in September, underscoring the strength of the manufacturing sector.
The official PMI, released on Sunday, rose to an 18-month high of 55.2 in October from 54.3.
Auto shares rose, cheered by upbeat results. Chongqing Changan Auto gained 7.43 percent to 14.02 yuan after reporting a 145 percent rise in net profit. SAIC Motor Corp, China's largest carmaker, advanced 6.29 percent to 24.68 yuan after reporting a ninefold jump in its third-quarter net profit.
Health-related shares rose after Premier Wen Jiabao warned about the spread of H1N1 influenza.
Shenzhen Neptunus Bioengineering advanced by its 10 percent daily limit to 20.35 yuan.
Companies that may benefit from a proposed Walt Disney Co theme park in Shanghai outperformed after Shanghai Mayor Han Zheng said over the weekend that the city would soon hold a news briefing on the project.
Shanghai Lujiazui Finance & Trade Zone Development rose 8.94 percent to 30.47 yuan. Shanghai Jielong Group Industry climbed by its 10 percent daily limit to 18.57 yuan. HONG KONG NARROWS LOSSES
The benchmark Hang Seng Index ended down 0.61 percent or 132.68 points at 21,620.19, after losing 2.57 percent at the opening. Turnover was HK$65.12 billion ($8.4 billion), down from Friday's HK$76.35 billion.
"Hong Kong is drawing strength from the recovery in the Chinese market, which eased selling pressure stemming from weak sentiment in the U.S.," said Castor Pang, research director at Cinda International.
Li & Fung declined 3.65 percent and Esprit Holdings lost 1.62 percent, as U.S. consumers' gloomy economic outlook weighed on exporters.
Local developers Sino Land fell 2.39 percent and New World Development slipped 1.88 percent. Chief Executive Donald Tsang told businessmen on Monday that the government wanted to avoid a property bubble.
Chinese offshore oil and gas producer CNOOC Ltd shed 1.16 percent, after sliding as low as 3.33 percent, on easing crude oil prices. PetroChina shed 1.25 percent.
Chinese property developer Yuzhou Property recouped some losses and ended down 0.7 percent at its trading debut in Hong Kong. The stock ended the midday session 4.8 percent lower.
The China Enterprise Index of top locally listed mainland Chinese stocks was down 0.22 percent at 12,741.88. It opened down 2.82 percent.
Bucking the trend, Tencent Holdings, which operates popular online games in China, rose 4.38 pecent. Credit Suisse raised its target price to HK$153.60 from HK$131.60 and kept its "outperform" rating.
Nine Dragons was up 3.87 percent. The packaging and papermaker's plan to use proceeds from the sale of new shares to pay off debt would help lift profit, analysts said.
Chinese ingot and wafer maker Comtec Solar, which debuted in Hong Kong on Friday, extended its fall, down 8.59 percent. The stock closed 5.7 percent lower on Friday on concerns that demand for its products would remain weak. (Editing by Chris Lewis)