* Shanghai rebar steady after diving as much as 4.7 pct
* Dalian iron ore ends up nearly 1 pct
* Agricultural commodities rally
By Manolo Serapio Jr
MANILA, May 30 (Reuters) - Iron ore and steel futures in China recovered from three-month lows to finish higher on Monday, but overall market sentiment remains fragile as supply picks up and seasonal demand wanes.
Both commodities are set to end May with their biggest monthly drop on record, as April's rally shifted to a rout after investors pared down optimism toward China's economy.
"The overall market sentiment remains weak as supply is rising while demand slows down seasonally," said Yu Yang, an analyst with Shenyin Wanguo Futures in Shanghai.
The most-traded rebar, a construction steel product, on the Shanghai Futures Exchange SRBcv1 closed up 0.2 percent at 1,990 yuan ($302) a tonne. It fell to as low as 1,894 yuan, its weakest level since March 4.
Rebar, or reinforcing bar, has fallen more than 20 percent so far this month, the most since the contract was launched in 2009.
A fall in inventories of rebar held by Chinese traders after three weeks of increase and a cut in steel production in the country's key Tangshan area could lend temporary support to prices, said Yu.
China's top steelmaking city of Tangshan has ordered mills in and near the area to cut production for five days from Friday to ease air pollution. the Dalian Commodity Exchange, the most-active iron ore DCIOcv1 gained 0.9 percent to end at 347.50 yuan a tonne, having dropped to 333 yuan earlier, its weakest since Feb. 29. The contract has dropped 24 percent so far in May, on track for its steepest monthly decline since it was introduced in 2013.
Steelmaking raw materials coking coal DJMcv1 and coke DCJcv1 rose 1.6 percent and 1.2 percent, respectively.
Elsewhere in China, agricultural commodities outperformed as investors tracked gains in overseas markets from cotton to corn. Dalian corn DCCcv1 climbed 4 percent and Dalian soymeal rose 3.7 percent.
On the Zhengzhou Commodity Exchange, cotton CCFcv1 rose 2.2 percent and rapeseed meal CRSMcv1 jumped by the 5 percent maximum allowed by the bourse.
($1 = 6.5818 Chinese yuan)