US, China data take 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

(Updates to midday)

By Parvathy Ullatil

HONG KONG, May 4 (Reuters) - Hong Kong shares jumped 4.2 percent in a third straight session of gains on Monday, scaling the market's highest level since mid-October 2008 earlier, with investors cheered by signs of recovery in China and stabilisation in the U.S. economy.

Coal & steel stocks rallied strongly after China's purchasing manager's index (PMI) for April rose for a fifth straight month, adding to evidence that the economy may be on the path to recovery.

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 benchmark Hang Seng Index .HSI ended the morning session 648.11 points higher at 16,169.10, after grazing past 16,177 points, 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.

Turnover edged up to HK$41.3 billion from midday Thursday's HK$41 billion. Turnover jumped to a two-week high of HK$70.9 billion on Thursday.

"If turnover tops HK$70 billion again today, then it could convince the market the break above 16,000 points is real and there may be further upside from there," said Pang.

The world's largest contract manufacturer of mobile phone handsets, Foxconn International Holdings (2038.HK) tacked on another 17.4 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.

Consumer goods exporter Li & Fung Ltd (0494.HK) jumped 9.8 percent to HK$23.80, building on last week's gains, after the company said it expected to sign more outsourcing deals within months as cash-strapped retailers in the United States looked to cut costs in the economic downturn.

The outsourcing deals in 2009 could be similar in size to the one the company signed with fashion retailer Liz Claiborne Inc (LIZ.N) in February, Li & Fung President Bruce Rockowitz told Reuters in an interview last Tuesday. [ID:nHKG369019]

The China Enterprises Index .HSCE of top mainland companies was up 4.3 percent at 9,471.97.

China property stocks soared after Guangzhou R&F Properties (2777.HK) said its contracted sales in April jumped 80 percent from a year earlier to 2.34 billion yuan ($343 million) and it was confident of achieving its interim sales target.

The Chinese real estate developer said contracted sales in the first four months totalled 8.3 billion yuan. It gave no comparison figures. The company had set a sales target of 22 billion yuan for 2009 and about 10 billion yuan for mid-year.

Shares in Guangzhou R&F were up 7.7 percent, while China Overseas Land (0688.HK) had advanced 9.4 percent.

Metal stocks jumped on the improved PMI data with Angang Steel (0347.HK) advancing 9.6 percent, while Aluminum Corp of China (2600.HK) added 7.4 percent

China Shenhua Energy (1088.HK) climbed 8.4 percent, while Yanzhou Coal (1171.HK) piled on 10.9 percent.

Market talk that coal miners may soon succeed in wrangling higher contract prices from power producers, after protracted negotiations, also fuelled gains on Monday, said brokers.

(Reporting by Parvathy Ullatil; Editing by Chris Lewis)