J.P. Morgan Research Analyst Sentiment Index (JSI) for China rebounded to 46.9 in May from a bearish 38.4 April reading, reflecting its analysts' increasing confidence on volumes, margins and earnings on the back of seasonal pick-up expectations, the investment bank said.

J.P. Morgan compiled the JSI as PMI survey where sector analysts act as the purchasing managers for China from August last year.

The modest surprise in May could drive sharp trading rallies in equities; however, the reading still stands below 50, which indicates contraction. The reading for inventories also dipped below 50 for the first time since the series were launched 10 months ago.

The flash May Markit manufacturing PMI for China eased to 49.6 from April's 50.4.

The official May manufacturing PMI will be released by the National Bureau of Statistics (NBS) on June 1 with the April NBS manufacturing PMI at 50.6.

J.P. Morgan revised down its GDP growth forecast for China to 7.6% from 7.8% due to slowing manufacturing investment, weaker-than-expected recovery in industrial production, a likely new round of destocking in some major industry sectors and no indication of policy stance to support near-term growth. - CW