(Updates prices, adds details, comments and background) SHANGHAI, Nov 16 (Reuters) - China"s yuan surged to a more than five-month high against the dollar on Tuesday morning, as investors embraced positive developments in talks between U.S. President Joe Biden and Chinese leader Xi Jinping. Both the onshore and offshore yuan jumped in morning trade, with the onshore spot price hitting a high of 6.3666 per dollar, the strongest since June 1, before changing hands at 6.3726 at midday, up 0.18% from previous late night close. Its offshore counterpart also leapt to 6.3616 at one point, the loftiest since June 1. The virtual meeting here between top officials from Beijing and Washington prompted some investors to raise their bets for improvements in bilateral relations and chances of partial tariff removals, traders said. Trade disputes between the world"s two largest economies have been one of the key factors influencing the yuan and broad financial market sentiment over the last few years. Chinese stocks also gained in the morning session. "Taking into account mounting U.S. inflationary pressure and Biden"s stance against the tariffs, we are rather optimistic for some modest conditional tariff cuts, which is one of the ways to ease U.S. inflation problem but could be politically costly for the Biden administration," said Ken Cheung, chief Asian FX strategist at Mizuho Bank. Biden and Xi stressed their responsibility to the rest of the world to avoid conflict as the heads of the two top global economies opened their talks. "I think the (U.S.) president and his secretary of state are beginning to find channels through which agreement can be reached," said Carl Tannenbaum, chief economist at Northern Trust. "And in fact it was just last week that some contemplation of reducing tariffs against China was floated by Washington, and that was eagerly received in Beijing. So I want to be careful and not be overoptimistic." The Biden administration was getting traction with China in talks over Beijing"s compliance with a Trump-era trade deal, U.S. Trade Representative Katherine Tai said last week, but she declined to predict an outcome while discussions continue. Prior to market opening, the People"s Bank of China (PBOC) set the midpoint rate at 6.3924 per dollar, 28 pips weaker than the previous fix of 6.3896. By midday, the broad dollar index fell to 95.418 from the previous close of 95.53. The yuan market at 0400 GMT: ONSHORE SPOT: Item Current Previous Change PBOC midpoint 6.3924 6.3896 -0.04% Spot yuan 6.3726 6.3839 0.18% Divergence from -0.31% midpoint* Spot change YTD 2.44% Spot change since 2005 29.88% revaluation Key indexes: Item Current Previous Change Thomson 101.59 101.26 0.3 Reuters/HKEX CNH index Dollar index 95.418 95.53 -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 6.3684 0.07% * Offshore 6.5395 -2.25% 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 Christian Schmollinger and Stephen Coates)