SHANGHAI, July 28 (Reuters) - China's yuan strengthened against the dollar on Monday, as better-than-expected economic data offset a weaker central bank midpoint fixing, traders said, as the spot market continued to push the traded rate closer to the midpoint.     Spot yuan  
  CNY=CFXS
   stood at 6.1870 per dollar by midday,  up 0.07 percent from last Friday's close, only 0.4 percent away from the midpoint, the closest the spot market and the midpoint have been since mid-March.     The People's Bank of China (PBOC) set its official midpoint  
  CNY=SAEC
   weaker for the fourth day on Monday, at 6.1622 per dollar, down 0.04 percent from last Friday.     The central bank widened the trading band -- the range within which the spot rate may trade away from the midpoint on any given day -- to 2 percent from 1 percent on March 15, after putting the currency on a sharp depreciation trend.     That helped flush speculators out of the market but also made traders highly conservative, with the spot rate trading consistently far weaker than the midpoint ever since.     However, while the yuan has been appreciating steadily since July 21, traders don't believe the PBOC is ready to tolerate another major rally; thus the spot rate has grown closer to the midpoint because it has been held relatively flat in recent weeks in the face of developments.         "Better-than-expected HSBC preliminary PMI data helps boost the yuan, but the central bank doesn't want the currency to appreciate too fast," said a trader at a Australian bank in Shanghai.        China's factory sector turned in its best performance in five months in May, a preliminary HSBC survey showed last Thursday.     "The yuan has broken the psychologically key 6.20 level and it will float in the range of 6.18 to 6.20 in the short term if a trend of appreciation can be established," the trader said.     "The PBOC is unlikely to intervene as obviously as it did in the past."         The onshore spot yuan market at a glance:   Item                       Current    Previous  Change  PBOC midpoint  
  CNY=SAEC
     6.1622     6.1597    -0.04%  Spot yuan  
  CNY=CFXS
         6.1870     6.1915    0.07%  Divergence from midpoint*  0.40%                  Spot change ytd                                 -2.15%  Spot change since 2005 revaluation              33.77%   *Divergence of the dollar/yuan exchange rate. Negative number indicates that spot yuan is trading stronger than the midpoint. The People's Bank of China (PBOC) allows the exchange rate to rise or fall 2 percent from official midpoint rate it sets each morning.  OFFSHORE CNH MARKET      The offshore yuan market at a glance:  Instrument                     Current  Difference                                          from onshore  Offshore spot yuan  
  CNH=D3
   *  6.2065   0.18%  Offshore non-deliverable       6.3100   -0.52%  forwards  
  CNY1YNDFOR=
   **                  *Premium for offshore spot over onshore  
  CNY=CFXS
   **Figure reflects difference from PBOC's official midpoint, since non-deliverable forwards are settled against the midpoint.  
  CNY=SAEC
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  http://link.reuters.com/jyz38v
        - China's yuan, other emerging mkt currencies vs dollar 
  http://link.reuters.com/xyd46v
        - Global currency performance INTERACTIVE GRAPHIC: 
  http://link.reuters.com/cyx46v
        - China's trade surpluses mainly driven by weak imports rather than strong exports. GRAPHIC: 
  http://link.reuters.com/qav68s
        - Despite relatively stable dollar/yuan exchange, the yuan is appreciating on a trade-weighted basis. GRAPHIC: 
  http://link.reuters.com/sed74t
       For a summary of all recent coverage and graphics on the internationalisation of the yuan, click here:  
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            >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>      (Reporting by the Shanghai Newsroom; Editing by Pete Sweeney and Jacqueline Wong)  ((pete.sweeney@thomsonreuters.com +86 21 6104 1777)(Reuters Messaging: pete..sweeney.thomsonreuters.com@reuters.net))  Keywords: MARKETS CHINA YUAN MIDDAY/