Mon Sep 19, 2011 - HONG KONG, Sept 19 (Reuters) - Shares of Europe-focused fashion retailer Esprit Holdings Ltd , which plunged 19 percent on Friday, repeated the dive and dropped another 19 percent on Monday to their lowest level in nine years as investors dumped the stock following a weak earnings outlook.

The stock, the biggest loser among the blue chip component, fell to HK$9.92, the lowest since February 2002, as long funds continued to liquidate their positions amid questions about its business outlook.

"It is a kind of free fall until investors are willing to come in and buy," said Alex Wong, a director at Ample Finance.

"Its market value has come down to a level that is less than what it planned to invest in rebuilding its brand," Wong said.

Shares had lost almost half of their value over the past few trading sessions since it announced the disappointing results last Thursday.

The shares, which are down about 73 percent so far this year, were steadying at HK$10.12 as of 0412 GMT.

Last week, Esprit reported a nearly 100 percent slump in full-year net profit. Brokers cut their earnings forecasts for the company and said they were sceptical about the company's business outlook and marketing plans.

Analysts said the stock plunge added pressure on Esprit since it might need to raise funds or cut its dividend in order to finance its recovery plan.

Esprit, which also competes in Asia with Japan's Fast Retailing , is investing more than HK$18 billion in the company until its fiscal year ending 2015 to rebuild its brand.

"Where is the money to come from," asked Alfred Chan, chief dealer at Cheer Pearl Investment. "Shareholders won't wait for a turnaround."

Samsung Securities said in a research note on Monday that it forecast Esprit's FY12 recurring earnings to decline 85 percent and rated the stock "sell" with a 12-month target price of HK$11.51.

"We believe it is still too early to know whether the company will see a strong turnaround in the fiscal year 2013, especially if economic growth in the eurozone continues to be sluggish," Heather Hsu, an analyst at Samsung Securities said.

(Reporting by Donny Kwok; Editing by Chris Lewis and Ken Wills)