* Shanghai Composite rises 1.3 percent, property stocks surge
* Hang Seng Index up 0.5 pct in fifth session of gains
* Cyclicals, coal stocks rise, Yanzhou hits record high
* Vanke up 6.8 pct, Gemdale hits 10 pct daily limit (Updates to midday)
By Vikram S.Subhedar and Samuel Shen
HONG KONG/SHANGHAI, Jan 4 (Reuters) - China's stock market started 2011 in a bullish mood, giving a lift to Hong Kong's market, as investors snapped up property stocks due to attractive valuations and commodity stocks on rising global prices of raw materials.
Data showing that manufacturing accelerating in the U.S. and Europe in December and that growth in China and India slowed to more sustainable levels lifted investor appetites for risky assets.
Property counters jumped in Shanghai, helping to lift China's key stock index 1.3 percent by the midday trading break on Tuesday. Hong Kong's Hang Seng Index was up 0.51 percent, rising for a fifth successive session.
Real estate developers surged in morning trade as some investors viewing near-record-low valuations as already reflecting more curbs to come, while discounting their still-robust growth momentum.
"Valuations are already very attractive, and developers are expected to report strong 2010 growth and healthy cash flows during the upcoming earnings season," said BOC International analyst Tian Shixin.
China Vanke Co Ltd, the country's biggest listed developer, jumped 6.8 percent in morning trading, while rival Gemdale Corp surged 10 percent to its daily limit.
Vanke shares trade at 9.8 times their forward 12-month earnings estimates, a discount of nearly 20 percent to their long-term median valuation, according to data from Thomson Reuters Starmine.
Gemdale trades at an even wider 30 percent discount to its median valuation since 2005.
"Investors also expect further tightening to have a limited impact on the industry, so any drop in share prices will attract bargain-hunting," said Tian.
Small- and medium-cap issues broadly rose as investors bet they would benefit from China's new five-year plan starting this year that focuses on economic restructuring.
"2011 may witness the start of a new round of the growth cycle, driven by regional economic development and industry restructuring," said Huatai-PineBridge Fund Management Co fund manager Qin Lingsong. "Chinese corporate profits are expected to rise 15-20 percent annually, which lends strong support to current valuations."
While analysts on average remain optimistic about Chinese shares in 2011, they said new tightening measures to curb inflation that is rising at its fastest pace since 2008 could keep the rally in check.
SHIPPERS, COAL RISE
The materials sector rose as commodity prices, in particular coal, showed little signs of letting up.
Optimism over demand on the back of a recovering global economy and supply disruptions in Australia due to heavy flooding is supporting coal price benefitting Chinese producers.
State-owned China Shenhua Energy Co Ltd, the world's top producer of coal by market value, rose 2.8 percent in Shanghai, the biggest boost to the benchmark index. In Hong Kong, Shenhua rose 1.5 percent.
Australia's biggest floods in decades have forced evacuations of mining areas and curtailed coal exports as major miners cancelled shipments and declared force majeure.
Yanzhou Coal Mining Co Ltd rose 2.7 percent to a record high on good volume as shares extended gains after breaking out of a tight range late last month.
Cyclical companies -- those directly affected by changes in economic activity -- were good bets over the next few months, said traders at Daiwa Capital, saying they would benefit from increased capital expenditure in the last quarter.
The rally in materials helped shippers on optimism that stronger manufacturing in the U.S. and Europe would boost demand for exports.
Container terminal operator Cosco Pacific Ltd rose 3.8 percent. China Shipping Container Lines Co Ltd rose 3.9 percent. (Editing by Chris Lewis)