Chinese equities rose slightly Friday after the release of strong May economic data but concerns over policy tightening and other uncertainties left market participants cautious.

China's consumer price index (CPI), the main gauge of inflation, increased in May by 3.1 percent from a year ago, the highest rate of increase since November 2008, according to figures released by the National Bureau of Statistics (NBS).

The NBS data showed that growth in factory production and investment continued to slow while retail sales, the main gauge of consumer spending, grew 18.7 percent in May year on year from 18.5 percent in April.

Affected by slower industrial output growth and higher-than-expected CPI data, the Shanghai Composite Index initially rose but fell in the afternoon to close at 2,569.94 points, up 0.29 percent, or 7.36 points, from the previous close.

The Shenzhen Component Index rose 17.11 points, or 0.17 percent, to end at 10,239.33.

Total turnover shrank to 152.66 billion yuan (22.35 billion U.S. dollars) from 167.53 billion yuan the previous trading day.

Losers outnumbered gainers by 488 to 359 in Shanghai and 572 to 368 in Shenzhen.

Analysts believe the slower growth in industrial output was due to recent tightening measures and that the market has turned cautious as the May CPI figure outpaced the 3-percent ceiling the government has set for this year.

Lu Ting, China economist at Bank of America-Merrill Lynch, said China's rising inflation may be interpreted negatively by markets.

However, according to Yu Yang, an analyst at Galaxy Securities, the CPI is still "under control" and there is little possibility for a rate hike.

Analysts also pointed out the decreased turnover volume reflected the fact some investors have taken a wait-and-see attitude ahead of next week's holidays.

Chinese markets will be closed from Saturday to Wednesday for the traditional Dragon Boat Festival Holiday.

Coal shares led the rise with a 1.8 percent gain as the May producer price index (PPI), a major measure of inflation at the wholesale level, rose 7.1 percent year on year, outpacing the CPI growth.

China Shenhua Energy Co., the country's biggest coal producer, climbed 0.78 percent to 23.35 yuan.