* HK stocks extend gains; Hang Seng Index at eight-month high
* Shanghai up after holiday on broader global rally
* Local developers, HKEx lead Hong Kong market higher
* Gold miners rally as gold prices hit record (Updates to midday)
By Vikram S. Subhedar and Farah Master
HONG KONG/SHANGHAI, Sept 27 (Reuters) - Hong Kong stocks rose to their highest level in more than eight months on Monday morning as investor appetite for Asian equities grew, with local property developers continuing their strong run.
The benchmark Hang Seng Index was up 1.28 percent at 22,401.98 by the midday break, bringing its gains for the month to 9 percent and lifting the index above levels reached in April. The China Enterprise Index was up 1.13 percent at 12,357.04.
"I don't see any signs of the market going crazy. While investor sentiment seems to have recovered, we're still in a trading range. The Hang Seng Index needs to break its November 2009 high for a further sustained rally," said Jackson Wong, a vice-president at Tanrich Securities in Hong Kong.
In the short-term, the HSI could come under pressure with its relative strength index (RSI) at 77, indicating technically overbought conditions. But resurgent trading volumes, due in part to a strong investor response to new listings, suggests momentum could push the market even higher led by local property plays.
Developers have advanced in September with the property sub-index up more than 15 percent, its best month since May 2009.
Sun Hung Kai Properties Ltd rose 3.8 percent, while Li Ka-shing-controlled Cheung Kong (Holdings) Ltd rose 3.5 percent to a more than two-year high.
Low interest rates and expectations for further appreciation in the yuan, which makes Hong Kong dollar-denominated assets cheaper for mainland investors, were likely to continue attracting funds into the local housing market, said analysts.
Capital flows into Hong Kong assets have pushed turnover on the Hong Kong stock exchange higher, in contrast to dull trading activity seen in developed markets, giving a boost to bourse operator Hong Kong Exchanges & Clearing Ltd (HKEx). HKEx rose 3.3 percent bringing its gain for the month to more than 25 percent.
SHANGHAI REOPENS HIGHER
China's key Shanghai Composite Index was 1 percent higher at 2,616.06 by midday Monday, reopening after a three-day market holiday last week and boosted by strong gains in overseas markets, while near record gold prices supported stocks such as Shandong Gold Mining Co Ltd.
The benchmark index has traded above its 60-day moving average at 2,587 for about six weeks, with analysts saying the technical level would provide solid support ahead of upcoming market holidays.
The market will be open for a total of five trading days over the next two weeks.
Gold companies rallied with Zhongjin Gold Corp Ltd up 4.8 percent, Henan Yuguang Gold & Lead Co Ltd ahead 10 percent, and Shandong Gold 5.2 percent higher.
"Shanghai shares are being supported by overseas markets such as the U.S. and Hong Kong, which have strongly gained while our market was shut," said Guo Yanling, analyst at Shanghai Securities. "Today's gains are not reflective of a turnaround in confidence; we still have upcoming market holidays so this rebound is likely to be muted."
Agricultural counters helped lift the index after China's Ministry of Industry and Information Technology said it would actively support the development of small and medium-sized enterprises in sectors such as rare earth.
Inner Mongolia Baotou Steel Rare-Earth (Group) Hi-Tech Co Ltd jumped 9.5 percent, while Xinjiang Sayram Modern Agriculture Co Ltd rose by its 10 percent limit.
Property stocks were mixed after state media reported that the central government had unveiled rules to restrict land hoarding by developers.
Shanghai's property sub-index had edged up 0.5 percent by midday after falling earlier in the session. ($=6.71)