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China sets yuan mid-point at 1-1/2-mth low after Fed rate cut

SHANGHAI, Aug 1 (Reuters) - China's central bank lowered its official yuan midpoint to the weakest level in 1-1/2 months on Thursday, reflecting an unexpectedly bounce in the greenback following the U.S. Federal Reserve's decision to cut its benchmark rate.

Thursday's midpoint was set at 6.8938 per dollar, 97 pips, or 0.14 percent, weaker than the previous fix of 6.8841 and was the softest since June 18.

The Fed cut had been widely expected, but the dollar index rose after the head of the U.S. central bank poured cold water on market expectations it was embarking on a lengthy easing cycle. (Reporting by Winni Zhou and Andrew Galbraith; Editing by Kim Coghill)