(Corrects currency to yuan paragraph 6) SHANGHAI, Oct 21 (Reuters) - China"s yuan hovered at it strongest level in four months against the greenback, after the central bank set its official midpoint rate on Thursday below 6.4 per dollar for first time since June. Prior to market opening, the People"s Bank of China (PBOC) set the yuan"s midpoint at 6.3890 per dollar, 179 pips, or 0.28%, stronger than the previous fix of 6.4069. It was the strongest fixing since June 11. The official guidance rate largely matched market forecasts, traders said, and it was 6 pips weaker than Reuters" estimate of 6.3884. Market participants usually gauge the deviation between official fixing and market projection to speculate whether policymakers are comfortable with the currency level for the time being, but investors have become unnerved by the authorities apparent absence of concern during the yuan"s ascent to its strongest level in six years against the currencies of China"s major trading partners. In the spot market, onshore yuan opened at 6.3930 per dollar and was changing hands at 6.3910 at midday, not far from a four-month high of 6.3794 hit a day earlier.Traders said there was heavy dollar selling by corporates. Some investors reckoned the yuan could revisit highs of around 6.35 per dollar that were scaled in late May. Ming Ming, head of fixed income research at CITIC Securities, said "China"s consistent strong exports, easing Sino-U.S. relations and ample onshore dollar liquidity" lent support for the yuan. "Meanwhile, soft U.S. non-farm payrolls, flooding global dollar liquidity, and the rising rate hike expectations at major European economies have hammered upward momentum in the dollar index," he said. Separately, the central bank"s recent open market operations have led to some speculation that the boosts given to liquidity were aimed at dampening the yuan"s strength. The PBOC injected 100 billion yuan through reverse repos for a second straight day on Thursday, attributing the move to countering factors including tax payments and government bond issuance. Demand from companies needing to make quarterly tax payments could create some tension in the interbank money market. But on Thursday, overnight Shanghai interbank offered rate (SHIBOR) fell to 1.683%, its lowest since Sept. 29. The broad dollar index fell to 93.509 from the previous close of 93.614, while the offshore yuan was trading at 6.3868 per dollar. The yuan market at 0404 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.389 6.4069 0.28% Spot yuan 6.391 6.3936 0.04% Divergence from 0.03% midpoint* Spot change YTD 2.15% Spot change since 2005 29.50% revaluation Key indexes: Item Current Previous Change Thomson 100.45 100.55 -0.1 Reuters/HKEX CNH index Dollar index 93.509 93.614 -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 6.3868 0.07% * Offshore 6.5753 -2.83% 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)