Data drives HK shares to 6 ½ month high

* US data, China PMI fuel broad-based rally

* HSI at highest since mid-October 2008

* China properties soar on Guangzhou R&F's upbeat sales

* Volumes scale four-month high at HK$80.3 bln

(Updates to close)

By Parvathy Ullatil

HONG KONG, May 4 (Reuters) - Hong Kong shares advanced 5.5 percent on Monday in huge turnover, sending the main index to its highest level since mid-October 2008, as data from China and the U.S. suggested the global economy was on the mend.

Coal and steel stocks rallied strongly after China's official purchasing manager's index (PMI) for April rose for a fifth straight month, adding to evidence the country would make an early recovery from the global economic slump.

Turnover soared to a four-month high of HK$80.3 billion compared with Thursday's HK$70.9 billion.

"The trend is pretty clear, the market is going to gain much more unless there is a big scare like widespread H1N1 flu. But a pullback will a great entry point for institutional funds, there is a lot more liquidity waiting to enter the market," said Steven Leung, sales director with UOB Kay Hian.

The benchmark Hang Seng Index .HSI ended 860.06 points higher at 16,381.05, after grazing 16,387.12, its highest level since October 15, 2008, earlier in the session.

The index also topped 16,000 points for the first time this year on Monday, and the convincing break has investors betting on a greater upside for the market as shorts squeezes will be triggered if the rally is sustained.

Most investors shrugged off concern over a global H1N1 flu pandemic even after Hong Kong's government on Friday confirmed the city's first case of the flu on Friday in a Mexican traveller and sealed off a hotel, quarantining 200 guests and 100 staff for seven days.

"The flu fears seem to be fading as the danger of it spreading seems to be lower now. On the other hand, we have China's PMI data, which seems to signal continued recovery for the economy, yet another reason to stay bullish," said Castor Pang, strategist with Sun Hung Kai Financial.

The world's largest contract manufacturer of mobile phone handsets, Foxconn International Holdings (2038.HK) tacked on another 17.8 percent to Friday's 19 percent rally after a landmark cross-strait telecom deal was struck between China Mobile (0941.HK) and Taiwanese Far EasTone (4904.TW).

Expectations of further Chinese investments into Taiwanese companies sent shares in Taiwan's market soaring 6 percent on Monday.