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China sets yuan midpoint to 2-wk low after loosening up on fixing mechanism

SHANGHAI, Jan 10 (Reuters) - China's central bank lowered its official yuan midpoint to the weakest level in nearly two weeks to 6.5207 per dollar on Wednesday.

The lower fix came as the central bank moves to effectively reduce the influence of the "counter-cyclical factor" in the midpoint fixing mechanism.

Wednesday's official midpoint was 239 pips, or 0.37 percent, softer than the previous fix of 6.4968 on Tuesday and was the weakest since Dec.29, 2017.

The People's Bank of China has taken a step to loosen control over the yuan exchange rate, sources familiar with the matter told Reuters on Tuesday, reflecting confidence that depreciation pressure on the currency has eased for now.

Sources said the PBOC had notified banks that contribute mid-point estimates that they could adjust the counter-cyclical factor by themselves, effectively allowing them to minimise its influence on their exchange rate contributions. (Reporting by Winni Zhou and John Ruwitch; Editing by Shri Navaratnam)