* Hang Seng recovers early losses to trade flat

* Chinese yuan recoups Monday drop in offshore trade

* Nikkei drops 2% following market holiday on Monday

By Hideyuki Sano and Paulina Duran

TOKYO/SYDNEY, Sept 21 (Reuters) - Global stock markets grappled with contagion fears on Tuesday, sparked by troubles at China Evergrande as growing risks the property giant could default on its massive debt pile prompted investors to flee riskier assets.

Asian markets were jittery in volumes thinned by public holidays in China, Taiwan and South Korea. The Hang Seng recovered from an early drop to trade near flat as financials and property firms bounced, while Japan's Nikkei returned from a market holiday with a drop of almost 2%.

S&P 500 futures rose 0.3% following the index's biggest fall in two months overnight and the Chinese yuan rebounded in offshore trade to recover Monday losses.

Markets in mainland China and Taiwan were still closed on Tuesday while Korean markets remain shut through Wednesday.

Investors fear a messy collapse or liquidation at Evergrande could ripple through China's property sector at a time when growth in the world's second-largest economy is already looking fragile.

A major test looms on Thursday when Evergrande bond interest payments are due. Failing to settle the interest within 30 days would put the bonds in default. Evergrande shares fell 4% in Hong Kong, though remained above Monday's lows.

Regulators have warned that its $305 billion of liabilities could spark broader risks to China's financial system if its debts are not stabilised.

"Whether Evergrande can make payments, and if not, whether the authorities will bail it out - those are the immediate questions," said Masahiro Ichikawa, chief strategist at Sumitomo Mitsui DS Asset Management.

"In the longer term, we could see slower Chinese growth hurting surrounding countries."

Elsewhere, Australia's stock market stabilised following Monday's slump in the shares of the country's big iron ore miners BHP, Rio Tinto and Fortescue Metals as Evergrande's wobbles sparked demand concerns.

"There's a bit of a relief rally," said John Milroy, investment adviser at Ord Minnett. "Whether it lasts or not will really depend on the shape and the action in the iron ore market."

In the currency market, traders took solace after Hong Kong's stock markets stabilised. The yuan recovered most of its Monday drop to trade at 6.4700 per dollar.

The euro traded at $1.1738, after having touched a near-one-month low of $1.1700 while the safe-haven yen slipped to 109.48 yen to the dollar.