China lifts yuan midpoint to near 4-month high, but weaker than f'cast

SHANGHAI, July 8 (Reuters) - China's central bank on Wednesday lifted its official yuan midpoint for the second day in a row to the strongest in nearly four months to reflect gains in the spot price a day earlier.

The People's Bank of China (PBOC) set the midpoint rate at 7.0207 per dollar prior to the market open, 103 pips, or 0.15%, firmer than the previous fix of 7.0310, and the strongest since March 17.

However, traders said the guidance rate came in weaker than their forecasts for a second straight session, with some interpreting it as a sign that the authorities might not want rapid gains in the local currency.

The yuan advanced further to a fresh 3-1/2-month peak and tested key resistance on Tuesday, although weaker-than-expected guidance by the central bank trimmed gains.

Wednesday's fixing was also 21 pips weaker than Reuters' estimate of 7.0186. (Reporting by Winni Zhou and Andrew Galbraith; Editing by Jacqueline Wong)