(Updates to close)
* HSI off 0.2 pct, Shanghai slumps 2.6 pct
* Premier Wen's comments triggers reversal of midday gains
* Property, financials, oil majors lead losses
* China Mobile hit by UBS downgrade before earnings
By Clement Tan and Vikram Subhedar
HONG KONG, March 14 (Reuters) - Shanghai shares posted their biggest daily loss this year on Wednesday, dragging Hong Kong markets into the red, after Premier Wen Jiabao doused hopes of easing in the property sector at the close of China's annual parliamentary meeting.
Property stocks in the mainland took the brunt of the intra-day reversal, as investors exited the sector which has beaten the broader market on bets that the government would ease curbs on home purchasing as the Chinese economy slows.
The Shanghai Composite Index ended down 2.6 percent at 2,391.2, its biggest daily loss since Nov. 30.
The index is now back at last Wednesday's levels after a three-day slide triggered when Premier Wen, at the start of the same parliamentary meeting, announced a sub-8 percent annual growth target for the first time in eight years.
The China Enteprises Index of the top mainland listings in Hong Kong shed 0.5 percent. The broader Hang Seng Index closed down 0.2 percent, reversing a 1.3 percent gain at midday.
Turnover in both markets surged, with A-share turnover in Shanghai at the highest since Nov. 12, 2010, and turnover in Hong Kong at the highest in more than a week.
"I think investors were very spooked by Premier Wen's solemn tone. He was very direct with the property part of his closing address," said the research head of a China brokerage, who declined to be identified because of the sensitivity of the matter.
The Shanghai property sub-index was the worst performer among sectors, diving 3.7 percent. However, it is still up 11.6 percent this year, compared to the 8.7 percent gain on the Shanghai Composite.
Poly Real Estate lost 3 percent while Shenzhen-listed China Vanke Co Ltd slipped 2.7 percent.
With real estate investment generating about 13 percent of economic output, Premier Wen's comments also rattled growth-sensitive sectors, sending oil and financial shares south.
PetroChina Co Ltd lost 0.9 percent in Hong Kong and 1.8 percent in Shanghai. Industrial and Commercial Bank of China (ICBC) lost 1.1 percent in Hong Kong and 0.5 percent in Shanghai.
Insurers, seen as proxys of the mainland A-share market due to its large investment, were weak. Ping An Insurance lost 2.2 percent in Shanghai and 1.7 percent in Hong Kong ahead of its 2011 earnings results on Thursday.
In Hong Kong, China Mobile Ltd was the top drag on the Hang Seng Index, falling 2.7 percent in more than twice its average 30-day volume ahead of its 2011 earnings results announcement on Thursday.
Shares of the mainland's biggest mobile operator were hit by a downgrade by broker UBS, which now also rates it as a "key sell" and a derivatives-led rotation into shares of smaller peer China Unicom (Hong Kong) Ltd.
A two-day rally in China Mobile starting last Friday took it to a 2-1/2 year high on Monday on hopes of its aggressive 4G rollout plans, although the jump was exacerbated by warrants activity.
Also dragging was shares of Cathay Pacific Airways Ltd , which slid 2.8 percent, reversing a midday gain of 1.7 percent after it said during midday trading break that its 2011 net profit plunged 61 percent.
Strength in HSBC Holdings Plc and Li & Fung Ltd kept the Hang Seng Index from slipping into the red until the last 40 minutes of trade.
HSBC Holdings Plc, Europe's largest bank and the Hang Seng Index's biggest stock, rose 2.4 percent in more than twice its 30-day average volume, tracking strength in the banking sector on Wall Street after the Fed released results from its latest stress tests on U.S. banks.
Li & Fung, manager of supply chains for retailers including Wal-Mart Stores Inc and Target Corp, jumped 4 percent, cheered by encouraging U.S retail numbers. (Editing by Ramya Venugopal)