* Onshore yuan rises to 7-week high
* Offshore yuan surges to highest since Aug 2015
* Official fixing at highest since 2015 devaluation
* Strong fix and dollar weakness prompt yuan buying
* Worries over possible trade war ease (Updates prices, adds quotes and details)
SHANGHAI, March 27 (Reuters) - China’s yuan extended its gains against the U.S. dollar to a seven-week high on Tuesday after the central bank set its official fixing at the strongest level in more than two-and-a-half years.
Prior to market opening, the People’s Bank of China (PBOC) lifted its official yuan midpoint to 6.2816 per dollar, 377 pips, or 0.6 percent, firmer than Monday’s fix of 6.3193.
Tuesday’s official guidance rate was also the strongest since Aug. 11, 2015, when China shocked global markets with a sharp 2 percent one-off currency devaluation.
The official fixing on Tuesday largely matched market expectations. And the strength in the fixing drove the spot yuan higher.
The onshore yuan opened at 6.2579 per dollar and surged to a high of 6.2523 at one point in early trade, the strongest level since Feb. 7.
The spot yuan rate was trading at 6.2654 as of 0218 GMT, 153 pips firmer than the previous late session close and 0.26 percent stronger than the midpoint.
The global dollar index, a gauge that measures the unit’s strength against six other major currencies stood at 89.111 as of 0218 GMT, languishing near a five-week low of 88.979 set on Monday.
Some traders said the domestic market expects the yuan to swing between 6.3 and 6.36 per dollar in the near-term. Market sentiment improved when the spot yuan rate breached the stronger end of the tight range and prompted significant dollar sales from both market participants and bank clients.
Market watchers said the yuan gained momentum as worries about a possible trade war between the world’s two largest economies eased.
“The sudden appreciation of renminbi against the dollar and currency basket shows that market believes that China is likely to compromise to ease the trade tension,” economists at OCBC Bank said in a note.
Chinese Premier Li Keqiang said on Monday China and the United States should maintain negotiations, reiterating pledges to ease access for U.S. businesses, as China scrambles to avert a trade war.
The offshore yuan also followed the strengthening trend surging to a high of 6.2400 at one point, the firmest level since Aug. 11, 2015. It was trading 0.2 percent firmer than the onshore spot at 6.2530 per dollar as of 0218 GMT.
Reporting by Winni Zhou and John Ruwitch; Editing by Sam Holmes