Wires

UPDATE 1-Yuan firms for 8th day as China, U.S. pave way for tariff rollback

(Adds onshore close, China says agreed with U.S. to cancel tariffs)

HONG KONG/SHANGHAI, Nov 7 (Reuters) - The yuan rebounded on Thursday to firm for an eighth consecutive day after China said it has agreed with Washington to roll back tariffs on each other's goods as part of an as yet unfinalised preliminary deal to pause their 16-month long trade war.

The remarks made by Chinese commerce ministry sent the onshore and offshore yuan helped the yuan strengthen below 7 per dollar in afternoon trade.

The yuan ended onshore trade at 6.9880 per dollar, firming from Wednesday's close at 6.9987 to reach its strongest level since Aug. 2.

The yuan came under pressure earlier in the session following reports raising the prospect of delays in finalising the deal. A senior U.S. official told Reuters on Wednesday the meeting between the U.S. and Chinese presidents to sign the deal could be delayed until December as discussions continue over terms and venue.

The official, who spoke on condition of anonymity, said it was still possible the partial agreement would not be reached, but a deal was more likely than not.

"The plot of this drama has all sorts of twists and turns, nothing is for certain until the last moment," said a Shanghai-based trader at a Chinese bank.

Prior to the open, the People's Bank of China set the guidance rate at 7.0008, its strongest since Aug. 7 and close to Reuters' estimate of 7.0044. Onshore yuan can trade 2% either side of this midpoint.

A Reuters poll of currency strategists on Thursday suggested that the yuan will give up its recent gains and weaken about 2% in six months, in the absence of a broader deal rolling back existing tariffs imposed on China.

"China's desire to roll back more U.S. tariffs is likely to require more time to negotiate terms," analysts at DBS wrote in a note on Thursday.

"Until we get more clarity on the venue and U.S. position on China's tariff request, look for Emerging Asian currencies and the Australian dollar to give back some of the gains chalked in October," they said.

The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 92.09, weaker than the previous day's 92.19. (Reporting by Noah Sin and Winni Zhou; Additional reporting by Jindong Zhang in Shanghai and Donny Kwok in Hong Kong; Editing by Simon Cameron-Moore)