* Hang Seng Index eases, profit-taking offsets gains in banks
* Turnover falls as investors pause after rally
* China markets re-open, U.S. jobs data on Friday eyed
* Mainland banks higher as investors seek value (Updates to midday)
By Vikram S.Subhedar
HONG KONG/SHANGHAI, Oct 7 (Reuters) - Hong Kong shares eased slightly on Thursday morning, pulling back from an 11-month high as investors paused after a strong rally and ahead of China's markets reopening on Friday.
The benchmark Hang Seng Index <.HSI> was down 0.18 percent at 22,838.87 by the midday trading break, with mainland banks outperforming for a second session as investors hunted for value, helping to limit the impact as other sectors succumbed to profit-taking.
The index is already up 2.2 percent this week, rising to a fresh 2010 high, as foreign investors poured money into the market in expectation that easing U.S. monetary policy would keep money cheap.
Speculation of more easing around the world has grown since the Bank of Japan cut interest rates close to zero on Tuesday and said it would pump cash into Japan's financial system through asset purchases.
"Market sentiment turned buoyant quite rapidly and it is understandable if some investors are probably feeling a little uncomfortable at this point," said Ben Kwong, chief operating officer at KGI Asia in Hong Kong. "The index is quite overbought and we have China's markets reopening tomorrow after a long holiday as well as the U.S. jobs report."
The Hang Seng Index's more than 10 percent rally over the past five weeks has taken it into technically overbought territory according to its relative strength index (RSI), currently at 76, and above or near the threshold level of 70 since mid-September.
The last time the index's RSI held at around these levels for longer was in 2007, when it was trading at record highs near 32,000.
Mainland Chinese banks, which have large weightings on Hong Kong indexes and have underperformed this year, saw gains with investors scouring for value.
Their relative valuations compared with other stocks on the benchmark might offer some upside from here, said Kwong, especially if funds continued chasing laggards.
Industrial & Commercial Bank of China Ltd <1398.HK> rose 0.7 percent and was the biggest boost to the broader market.
Bank of Communications Co Ltd <3328.HK> rose 0.5 percent.
Mainland Chinese banks listed in Hong Kong are trading at discounts to long-term valuations based on forward 12-month price-to-book and price-to-earnings multiples.
ICBC trades at a 20 percent discount to its 10-year median price-to-book ratio of 2.4, Thomson Reuters Starmine data showed. Bank of Communications trades at a 26 percent discount.
Offsetting those gains, heavyweight HSBC Holdings Plc <0005.HK> fell 0.7 percent and Tencent Holdings Ltd <0700.HK>, was down 1.8 percent following a 20 percent gain since the end of August.
Wharf (Holdings) Ltd <0004.HK>, which owns malls in Hong Kong, rose 2.4 percent on expectations that retail rents would remain strong as mainland shoppers continue to flock to stores in Hong Kong.
UBS analysts, in a note to clients, cited the Hong Kong Tourism Board saying the first three days of the National Day Golden Week saw a 52 percent surge in mainland tourist arrivals. (Editing by Chris Lewis)