* Weak U.S. market weigh on China, HK shares * HK developers slump after HKMA says will limit mortgages (Updates to close)
By Jun Ebias and Claire Zhang HONG KONG/SHANGHAI, Oct 27 (Reuters) - Shares in China and Hong Kong closed at multi-week lows on Tuesday, as weak overseas markets prompted investors to pocket recent gains, while energy and metals stocks retreated on soft commodity prices.
In Shanghai, China's key stock index sank 2.83 percent, its biggest one-day loss in five weeks.
Hong Kong's benchmark Hang Seng Index fell 1.86 percent, or 420.14 points, the worst one-day drop in more than three weeks, to 22,169.59. Turnover was HK$73.56 billion ($9.5 billion) versus Friday's HK$76 billion.
Hong Kong financial markets were closed on Monday for a public holiday.
Among property developers, Sino Land fell 5.37 percent, Henderson Land dropped 4.34 percent and Sung Hung Kai Properties declined 3.35 percent.
The Hong Kong Monetary Authority on Friday said it would implement measures to slow a surge in luxury property prices driven by rich buyers from mainland China, including capping mortgage loan values.
"The market is concerned that the Hong Kong government is likely to implement more policies to prevent home prices from rising further," said Belle Liang, research head at Core Pacific-Yamaichi.
The government and developers would meet this week to discuss Hong Kong's land supply and auction policies, Liang said. The China Enterprise Index of top locally listed mainland Chinese companies fell 1.28 percent to 13,145.59,led by a 5.49 percent drop in China Shipping Development.
China Life ended up 0.53 percent, after gaining nearly 2 percent earlier in the session on optimism that rising financial markets would sustain its long-term growth. The world's top life insurer by market value on Monday reported that third-quarter earnings more than doubled.
Rival Ping An Insurance erased earlier gains to end down almost 1 percent, ahead of the announcement of its third-quarter results later in the day.
ANTA Sports fell 5.41 percent. The company said its major shareholders would sell a total 80 million shares, or 3.2 percent of the company, at HK$10 each as part of their asset management plan.
Hong Kong Resources Holdings, which resumed trading in the afternoon session, fell 2.23 percent. The company said it was placing HK$130 million worth of shares.
SHANGHAI DOWN
The Shanghai Composite Index closed at 3,021.459 points, after having scored an 11 percent gain for the month as of Monday's close. Overseas, the Dow Jones Industrial Average dropped more than 1 percent.
Losing Shanghai A shares outnumbered gainers by 801 to 144, while turnover rose to 139 billion yuan ($20.36 billion) from Monday's 131 billion yuan.
Energy and metals shares were hit hard by weakness in commodity prices, with China Shenhua Energy losing 4.61 percent to 34.79 yuan, while Jiangxi Copper dropped 5.67 percent to 39.43 yuan.
"Cautious investors cashed in gains, taking overseas weakness as a convenient excuse," said Qian Qimin, deputy head of research at Shenyin and Wanguo Securities in Shanghai.
Qian added that the Chinese market's rally this month, propelled by a solid economic recovery and a strong improvement in corporate earnings, remained intact.
The index should be able to find firm support around the psychologically important 3,000-point level, although it may take several weeks to climb back to this year's high of 3,478 points, Qian said.
Technical charts had shown the index was becoming overbought, with the 14-day Relative Strength Index (RSI) reaching 63 as of Monday's close. The RSI fell back to 54 at Tuesday's close. A reading of 70 or above indicates the market is overbought.
Financial shares were soft, with Industrial and Commercial Bank of China, the country's biggest lender, slipping 2.49 percent to 5.09 yuan.
A total of 236 billion ICBC shares worth 1.23 trillion yuan became tradeable on Tuesday after the expiry of lock-up periods but analysts said they were mainly in the hands of big institutions that were unlikely to cut their holdings sharply.
A Chinese media report that an announcement may be imminent on a long-discussed Walt Disney proposal to build a theme park in Shanghai lifted shares of companies rumoured as likely participants in the project.
Shanghai Lujiazui Finance & Trade Zone Development rose 4.02 percent to 29.50 yuan and Shanghai Jielong Group Industry climbed by its 10 percent daily limit to 16.71 yuan.
The official Securities Times, citing a government source, reported on Tuesday that the Shanghai Disney project had received approval from policymakers in mid-October and was going through the final administrative process, with a formal announcement likely this week.
A Disney representative could not immediately be reached for comment in Hong Kong. (Editing by Chris Lewis)