SHANGHAI stocks traded nearly flat this morning as investors stayed on the sidelines ahead of tomorrow's release of industrial data.

The key Shanghai Composite Index added 0.77 points, or 0.03 percent, to 2,318.52. Turnover was 53.2 billion yuan (US$8.7 billion) by the noon break.

"The market is expected to remain volatile on the last trading day of May as investors wait for new manufacturing data for cues on China's economic conditions," Dongguan Securities analysts said in a report today.

China is due to release the official Purchasing Managers' Index tomorrow. The HSBC flash PMI, the earliest indicator for China's industrial activity, fell in May to 49.6, slipping into the territory of contraction for the first time since October.

Dongguan Securities said the market sentiment was also depressed by financial turbulence in foreign markets.

Japan's Nikkei Average slumped 5.2 percent yesterday, the biggest single-day loss since the March 2011 earthquake and tsunami.

Most gold stocks rose after gold futures for August delivery in New York rose 1.5 percent to US$1,412 an ounce, the highest settlement in more than two weeks.

Zhongjin Gold Corp added 0.2 percent to 12.44 yuan. Shanghai Yuyuan Tourist Mart Co, a gold jewelry retail chain, notched up 0.26 percent to 7.68 yuan.

Property developers declined. Poly Real Estate, China's second-largest developer, dropped 2.2 percent to 12.55 yuan. Gemdale Corporation shed 0.9 percent to 7.93 yuan.