(Adds comment from Fed vice chair)
* China's c.bank chief pledges to keep yuan value stable
* China's stance echoes IMF pledge to avoid using FX as trade tool
* Beijing likely keen to prevent trade war tipping over into FX war
* US Treasury Secretary Mnuchin says China wants to avoid more yuan falls
NUSA DUA, Indonesia, Oct 13 (Reuters) - China's top central banker on Saturday pledged to keep the yuan currency's value "broadly stable," a sign that Beijing may be trying to prevent a bruising trade dispute with the United States from spilling over into a currency war.
People's Bank of China Governor Yi Gang's statement at the International Monetary Fund and World Bank annual meetings in Bali came as U.S. Treasury Secretary Steven Mnuchin said Chinese officials had told him that further yuan depreciation was not in China's interest.
Mnuchin has reiterated his concerns that a major drop in the yuan's value this year against the dollar could be part of an effort to gain a trade advantage for Chinese exports or to offset the impact of U.S. tariffs.
The yuan has fallen more than 8 percent against the dollar since the end of April to about 6.91 on Friday, close to the psychologically important 7.0 level not seen in a decade.
"China will continue to let the market play a decisive role in the formation of the RMB exchange rate," Yi said in an International Monetary and Financial Committee (IMFC) statement posted on Saturday. "We will not engage in competitive devaluation, and will not use the exchange rate as a tool to deal with trade frictions."
His statement echoes currency pledges made in a communique issued by the IMF's member countries on Saturday to step up their trade dialog as rising tariff frictions, and higher borrowing costs threaten to knock global growth.
In the statement from the IMF's steering committee, the member countries also agreed to debate ways to improve the World Trade Organization so it can better address trade disputes.
"We acknowledge that free, fair, and mutually beneficial goods and services trade and investment are key engines for growth and job creation," the IMFC said in the statement.
"We will refrain from competitive devaluations and will not target our exchange rates for competitive purposes," it added.
RATE HIKE WORRIES
On Thursday, IMF Managing Director Christine Lagarde warned countries against engaging in currency and trade wars, which would hurt global growth as well as "innocent bystander" nations, including emerging markets that supply commodities
Some of these countries, including Indonesia, the host of the IMF and World Bank meetings, are already struggling to contain capital outflows prompted by higher U.S. interests rates.
Fears that rates could spike sharply higher - and the international trade tensions - touched off a searing sell-off in global stock markets over the past week.
European Central Bank Governor Mario Draghi warned on Saturday that a "snap back" in rates and a sharp repricing of asset prices were the biggest risks to the economic outlook.
Federal Reserve Vice Chair Randal Quarles said the U.S. central bank considers the effect of its actions on emerging markets, but getting domestic monetary policy right was the Fed's priority.
"It's not going to be in the interest of anyone in the world ... for us to get behind the curve in the U.S. by moderating what we think is the right course of domestic policy," Quarles told a finance conference in Bali.
Blaming the Sino-U.S. trade dispute and tighter financial conditions in emerging markets, the IMF this week cut global growth forecasts for 2018 and 2019.
"The recovery is increasingly uneven, and some previously identified risks have partially materialized," the IMFC communique said, referring to threatened tariffs and outflow pressures.
The United States and China have slapped tit-for-tat tariffs on hundreds of billions of dollars of each other's goods over the past few months, sparked by U.S. President Donald Trump's demands for sweeping changes to China's intellectual property, industrial subsidy and trade policies.
Trump has frequently accused China of cheapening its currency to gain a trade advantage, claims Beijing has consistently rejected. The U.S. Treasury is due to release a key report on currency manipulation next week.
Despite reassurances from China's central bank on currency policy, some analysts say yuan weakness will persist, as there is no clear path towards resolving the U.S.-China trade dispute and higher tariff rates loom in January.
"Clients in China remain unwilling to call a bottom in the yuan," NatWest Markets head of foreign exchange strategy Mansoor Mohi-uddin said in a research note. "This in turn makes us cautious about calling for a peak in the dollar globally."
Further Federal Reserve rate hikes are expected to underpin the dollar's strength and increase capital outflow pressures on emerging market economies
But Bank of Japan Governor Haruhiko Kuroda said the Fed's rate hikes were "basically good" for the world economy, though he was more cautious about escalating trade tensions due to their "rather unusual" scale.
(Reporting by Leika Kihara Editing by Shri Navaratnam)