The Hang Seng Index surged to its highest point in nearly eight months yesterday as bullish investors charged into the market after US consumer confidence unexpectedly rose the most in six years. The index opened sharply higher following overnight gains on Wall Street, and advanced steadily throughout the day before finishing up 893.71 points, or 5.26 per cent, at 17,885.27. It came within a whisker of the 18,000-level just a day after dipping below 17,000 for the first time in seven trading sessions. Investors cheered news that consumer sentiment in the United States had increased much more than expected in May. Hong Kong stocks were also supported by the government's HK$16.8 billion relief package announced on Tuesday. Up 15.23 per cent so far this month, the Hang Seng Index is heading for its largest monthly rise since October 2007. 'Investors are still positive because they are only looking at those indicators which favour the market,' Linus Yip, a strategist with First Shanghai Securities, said. 'It's good for the market, especially in the short term.' However, the bullish sentiment failed to carry over to Europe and the US, with the FTSE 100 ending up 4.51 points at 4,416.23 and the Dow Jones Industrial Average down 19.51 at 8,453.98 in early afternoon. Trading turnover in Hong Kong swelled to HK$93.06 billion yesterday as investors converged on the market during the month's final trading day for futures contracts. Analysts said stocks were also boosted by funds migrating back from the property market, which many fear may now be overvalued. Nevertheless, several hundred people queued up in Tsim Sha Tsui last night, snapping up 84 flats at the Sino Land-MTR Corp Lake Silver project in Wu Kai Sha in just two hours. Once the Hang Seng Index started climbing yesterday, institutional investors wasted little time in beefing up their equity portfolios, said Steven Leung, a director of institutional sales at UOB Kay Hian. 'And before the half-year end, they have to reduce cash levels and increase equity exposure, so in June the [buying] momentum will still be strong,' Mr Leung said, adding that the Hang Seng Index could test the 20,000-level next month. The government announced its stimulus measures in the hope that it could help the city's beleaguered economy turn the corner. However, Financial Secretary John Tsang Chun-wah yesterday warned of possible deflation in the city by the end of the year, which could cause more serious problems than marginal inflation. And fears are mounting that stocks have gained too much and are due for a consolidation. The Hang Seng Index has already risen 57.65 per cent since March 9 and is heading for its third straight monthly gain. Analysts attribute some of the run-up to a recent influx of so-called hot money from overseas investors who in a low-interest rate environment have quickly turned to markets that show early signs of recovery. Japan gained 1.37 per cent and Taiwan increased 3.10 per cent. The Shanghai Composite Index gained 44.36 points, or 1.71 per cent, to 2,632.93. It has increased 6.27 per cent this month.