SHANGHAI, Nov 4 (Reuters) - China"s yuan touched a near one-week high on Thursday, reflecting broad dollar weakness in global markets after the U.S. Federal Reserve said it would not rush to raise interest rates even as it began unwinding its pandemic-era stimulus. The dovish tone seen in the Fed"s latest policy statement and Chair Jerome Powell"s remarks in a news conference dragged the greenback lower, but some yuan traders said policy tightening and rate hikes at the U.S. central bank would boost the dollar and pressure the yuan in mid- to long-term. "We believe that the yield gap between the United States and other economies would widen at a slower pace than market had expected, hence give less support to the dollar than estimated," said Marco Sun, chief financial markets analyst at MUFG Bank. "Before the Fed reveals a clear sign of raising interest rates, we expect dollar appreciation against other major currencies and the yuan would be rather mild and chances for a tsunami-style dollar rising would be low." Prior to the market opening, the People"s Bank of China (PBOC) set the midpoint rate at 6.3943 per dollar, 136 pips or 0.2% firmer than the previous fix of 6.4079. In the spot market, the onshore yuan opened at 6.3950 per dollar and rose to a high of 6.3917, the strongest level since Oct. 29. By midday, it was changing hands at 6.3941, 121 pips firmer than the previous late session close. Traders said the easing dollar and Fed remarks overnight prompted some corporate dollar selling which supported the yuan on Thursday morning. Some market participants said there remained some upside room for the yuan in the short term as Chinese companies traditionally have higher demand for the local currency towards the year-end for various payments. Such conversion into the Chinese currency would drive the yuan higher. By midday, the broad dollar index stood at 94, while the offshore yuan was trading at 6.3938 per dollar. The yuan market at 0400 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.3943 6.4079 0.21% Spot yuan 6.3941 6.4062 0.19% Divergence from 0.00% midpoint* Spot change YTD 2.10% Spot change since 2005 29.44% revaluation Key indexes: Item Current Previous Change Thomson 100.64 100.59 0.0 Reuters/HKEX CNH index Dollar index 94 93.834 0.2 *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 6.3938 0.00% * Offshore 6.572 -2.70% 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 Kim Coghill)