(Adds comments and table, updates midday prices) SHANGHAI, July 14 (Reuters) - China"s yuan eased against a firmer dollar on Wednesday, with many investors growing cautious after the yuan"s value against major trading partners surged to a more than five-year high due to other currencies weakening faster against the greenback. Before the market opened, the People"s Bank of China (PBOC) set the midpoint at 6.4806 yuan per dollar, 49 pips weaker than the previous fix of 6.4757. It was the weakest since June 24. The index for yuan"s trade-weighted basket rose to 98.45, the highest since March 16, 2016, according to Reuters" calculations based on official data. Many investors subscribe to a view that an index showing above 98 would hurt China"s exports, and some speculated that policymakers could act to temper the strength of the yuan, which has gained 0.8% against the dollar this year. "The relatively rich valuation of CNY, with year-to-date 3.8% appreciation against its basket, adds another layer of vulnerability in the coming months, not to mention the divergence in policy direction compared with the U.S. Federal Reserve on tapering and normalization," Wee-Khoon Chong, senior markets strategist for APAC at BNY Mellon, said in a note. The spot yuan opened at 6.4731 per dollar and was changing hands at 6.4748 at midday, 63 pips weaker than the previous late session close. Sun Guofeng, head of the monetary policy department at the PBOC, told media on Tuesday that China would maintain normal monetary policy stance and prioritise stability and focus on domestic conditions. Sun"s remarks came after the PBOC announced on Friday that it would cut the amount of cash that banks must hold as reserves. But still, some investors took the surprise RRR cut as a sign of a dovish tilt and believed that higher liquidity should put downward pressure on the yuan, according to traders. They added that a firmer dollar in global markets also weighed on the yuan in morning trade, as the greenback gained support after high U.S. inflation numbers spurred bets of faster monetary policy tightening than Fed officials have so far signalled. Some said investors would shift their attention to Fed Chair Jerome Powell testifying before Congress on Wednesday and Thursday for more clues on the timing of a tapering of stimulus and higher interest rates. By midday, the global dollar index stood at 92.726, while the offshore yuan was trading at 6.48 per dollar. The yuan market at 0402 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.4806 6.4757 -0.08% Spot yuan 6.4748 6.4685 -0.10% Divergence from -0.09% midpoint* Spot change YTD 0.83% Spot change since 2005 27.83% revaluation Key indexes: Item Current Previous Change Thomson 98.38 98.31 0.1 Reuters/HKEX CNH index Dollar index 92.726 92.804 -0.1 *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% from official midpoint rate it sets each morning. OFFSHORE CNH MARKET Instrument Current Difference from onshore Offshore spot yuan 6.48 -0.08% * Offshore 6.6478 -2.52% non-deliverable forwards ** *Premium for offshore spot over onshore **Figure reflects difference from PBOC"s official midpoint, since non-deliverable forwards are settled against the midpoint. . (Reporting by Winni Zhou and Andrew Galbraith; Editing by Himani Sarkar, Gerry Doyle & Simon Cameron-Moore) Our Standards: The Thomson Reuters Trust Principles.