(Updates to close)
* Mainland indexes surge to 2-1/2-month high
* CSI300 index posts best weekly gain since early June
* Investors raise bets in stocks
* Start-up board ChiNext surges 3.7 pct
By Ruby Lian and Nathaniel Taplin
SHANGHAI, Nov 6 (Reuters) - China's stocks surged for the third consecutive session on Friday, as investors continued bets on blue chip companies, boosting the main indexes to 2-1/2-month highs this week.
The CSI300 index of the largest listed companies in Shanghai and Shenzhen rose 2.4 percent, to 3,793.37, and ended the week up 7.3 percent, its best weekly gain since early June.
The Shanghai Composite Index jumped 1.9 percent, to 3,590.03 points and advanced 6.1 percent for the week.
The rekindled interest in Chinese stocks, led by financials and small-caps, appears to have lured investors away from fixed income this week with bond yields broadly higher on the week.
Market watcher said bond prices might be undergoing a correction after a recent surge but if the momentum in stocks takes stronger root, funds could boost their equity allocations.
"The rebound in the stock market might attract some asset allocations in funds from the bond market, as well as from some institution investors," said a trader at a Chinese bank in Shanghai.
Mainland stock indexes are up by more than 25 percent from the troughs they hit during the August stock crash, and trading volumes soared to a three-month high this week.
The blistering gains this week were kicked off by expectations of an upcoming trading connect scheme between Hong Kong and Shenzhen stock markets that could boost transaction volume for stocks and revenues for securities firms.
Investors were also inspired by other positive factors, including comments from China's President Xi Jinping about sustaining economic growth and radical reforms to be carried out in state-owned enterprises over the next five years.
Some retail investors took profit earlier on Friday but resumed buying later, in a sign of returning investor appetite after the summer crash. Mainland stock index futures also recorded strong gains across benchmark indexes.
And investors continue to increase their margin trading leverage, with outstanding margin loans on Wednesday hitting their highest since the end of August.
A total of 14 securities firms including Everbright , Orient Securities and CITIC Securities have hit their upward daily limit of 10 percent and the rest surged more than 7 percent.
Most listed brokerage companies achieved revenue and net profit gains in October, with nine inking more than 100 percent net profit growth.
Meanwhile, the start-up board ChiNext gained 3.7 percent, lending support to the broader market. The index has now gained 48 percent from its mid-September low. (Additional reporting by Shanghai Newsroom; Editing by Sam Holmes and Jacqueline Wong)