CAIRO, July 20 (Reuters) - Orascom Telecom posted its sharpest single-day gain in over a year on Sunday, lifting Egypt's benchmark index as investors deemed the share a bargain relative to earnings expectations.

Shares of the regional mobile operator, which have plunged 36 percent this year to Thursday's close, jumped 4.2 percent to 60.91 Egyptian pounds ($11.47). The shares had fallen nearly 7 percent last week.

"Orascom Telecom is cheap," said Teymour el-Derini, trader at Beltone investment bank in Cairo. "People are trying to take advantage of valuations."

Shares of Orascom are trading at 12.08 times expected 2008 earnings, compared to a Middle East sector average of 12.56 times earnings, according to Reuters data.

Orascom had offered to buy back its own shares twice this year at 83 pounds per share, saying it had a large cash surplus that exceeded investment opportunities.

The CASE30 index gained 1.27 percent to 9,475.17 points.

Shares of Orascom Construction Industries gained 2.9 percent to 406.98 pounds, and Derini said investors also deemed that share cheap relative to earnings expections. HSBC set a price target of 600 pounds earlier this month.

Shares of real estate developers also rose, led by Sixth of October Development and Investment (SODIC), which surged 6.8 percent to 141.74 pounds.

The stock has fallen almost six percent in the five sessions to Thursday's close and 42 percent this year.

Shares of Medinet Nasr Housing, down 14 percent this year to Thursday's close, jumped 1.9 percent to 47.52 pounds. "The ones that have gotten hit are pulling up the sector," Derini said.

The Hermes index rose 1.2 percent to 822.11 points. The broader CIBC index gained 1.8 climbed 467.05 points. ($1 = 5.31 Egyptian pounds) (Writing by Will Rasmussen)