* SSEC +0.6 pct, CSI300 +0.5 pct, HSI +0.3 pct
* China Communist Party to hold key congress in mid-Oct
* Shenhua, GD Power surge on merger deal
SHANGHAI, Sept 1 (Reuters) - China and Hong Kong stocks started the month on a firm note, with risk appetites boosted by strong Chinese factory activity in August and expectations the market will remain bullish in the lead-up to a key Communist Party congress in mid-October.
State media said late on Thursday that China's once-every-five years party congress will start on Oct. 18. That strengthened expectations that Beijing will help maintain a good market environment during this politically-sensitive period.
The CSI300 index rose 0.5 percent, to 3,841.92 points by the lunch break, extending this week's gain to 1.2 percent. The Shanghai Composite Index gained 0.6 percent, to 3,379.94 points, and was up 1.5 percent this week.
The Hang Seng index added 0.3 percent, to 28,057.51 points, hovering around the highest level in over two years. The Hong Kong China Enterprises Index was flat.
"With the date of the Party Congress finally set, uncertainty has been removed, boosting risk appetite," said Yang Hai, analyst at Kaiyuan Securities.
"It also fuels expectations that reforms in the state sector will accelerate."
At the congress, President Xi Jinping will lay out his vision for the next five years and beyond, with focus on areas like economic reform, military modernisation and the war on corruption.
Sentiment was also lifted on Friday by a private survey showing China's manufacturing activity continued a trend and expanded at the fastest pace in six months in August, confirming a similar official survey published on Thursday.
UBS strategist Gao Ting said in a report on Friday that profitability at major industrial firms could increase further, thanks to Beijing's stepped-up efforts to reduce pollution.
"We don't think the market has fully priced in the intensity and duration of environmental policy enforcement over long term, nor the way it could accelerate Chinese enterprise upgrades," Gao wrote.
"Rising industry concentration could drive major profitability increases."
China's resources shares, the biggest beneficiary of Beijing's supply-side reforms, continued to surge on Friday, with its index up 3.1 percent.
China's top coal miner China Shenhua Energy Co Ltd surged the maximum allowed 10 percent in Shanghai and rose 1.2 percent in Hong Kong, on the back of a major merger deal.
Parent Shenhua Group Corp Ltd will take over China Guodian Group Corp, among the country's top five state power producers, in a deal that will create the world's largest power utility, worth $278 billion.
Guodian's Shanghai-listed unit GD Power jumped 10 percent.
(Reporting by Samuel Shen and John Ruwitch; Editing by Richard Borsuk)