SHANGHAI, Aug 12 (Reuters) - China"s yuan on Thursday recovered from a two-week low against the dollar hit in the previous session, reflecting the dollar"s retreat in global markets after a cooling U.S. inflation dampened expectations for an earlier Federal Reserve tapering. Prior to market opening, the People"s Bank of China set the midpoint rate at 6.4754 per dollar, 77 pips or 0.12% firmer than the previous fix of 6.4831. In the spot market, onshore yuan opened at 6.4760 per dollar and was changing hands at 6.4752 at midday, 38 pips firmer than the previous late session close. It hit a low of 6.4890 on Wednesday, the weakest since July 28. Traders said despite the gains in the spot prices, the yuan remained stuck in a tiny range of 30 pips in morning session. Official data released on Wednesday showed that China"s new bank loans fell in July to their lowest in nine months while broad credit growth hit a 17-month low, adding to market expectations that modest policy easing may be needed to underpin the country"s economic recovery. While the PBOC highlighted policy stability in its second quarter monetary policy report and dampened market expectations for aggressive monetary easing including interest rate cuts, analysts were debating what Beijing would do next. "Looking ahead, we think fiscal policy implementation is likely to accelerate, and the remaining unissued special bonds will likely ease the fear of a further total social financing (TSF) slowdown," Citi analysts said in a note. However, Goldman Sachs still sees chances for more monetary easing measures. "The weak credit data and the recent resurgence of virus increased the likelihood of incremental policy easing in our view," they said in a note. "We continue to expect one more reserve requirement ratio (RRR) cut later this year, and expect government bond net issuance to increase in the next few months which would support overall TSF growth." Different easing approaches could have different impact on the financial markets, and monetary easing could put downside pressure on the yuan in the short term. By midday, the global dollar index fell to 92.867 from the previous close of 92.893, while the offshore yuan was trading at 6.4769 per dollar. The yuan market at 0400 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.4754 6.4831 0.12% Spot yuan 6.4752 6.479 0.06% Divergence from 0.00% midpoint* Spot change YTD 0.82% Spot change since 2005 27.82% revaluation Key indexes: Item Current Previous Change Thomson 98.69 98.67 0.0 Reuters/HKEX CNH index Dollar index 92.867 92.893 0.0 *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 6.4769 -0.03% * Offshore 6.6558 -2.71% 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 Simon Cameron-Moore)