Yuan firm after c.bank sets mid-pt near 4-mth high

* Central bank sets yuan mid-point at near 4-month high

* U.S. dollar index hovers around one-year low

SHANGHAI, Sept 17 - The Chinese yuan was firm against the dollar on Thursday after China's central bank set the mid-point at nearly a four-month high as the U.S. dollar index hovered around one-year lows.

Before trade began, the People's Bank of China set the yuan's daily mid-point at 6.8272 versus the dollar, the reference rate's highest level since May 25 and up from Wednesday's 6.8281.

Spot yuan was trading at 6.8260 at midday, slightly firmer from Wednesday's close of 6.8258.

The dollar index fell slightly to 76.222 around midday in Asia, near a one-year low of 76.151 hit earlier. The index has shed more than 2 percent this month.

"The stable yuan policy will not change in the near term, but dollar weakness may lead the (Chinese) central bank to set a slightly higher mid-point," said a dealer at an Asian bank in Shanghai.

Several dealers said they expected the yuan to move between 6.8200 and 6.8300 in the coming days.

Offshore, benchmark one-year dollar/yuan non-deliverable forwards (NDFs) fell slightly to 6.7265 bid at midday on Thursday, compared with Wednesday's close of 6.7300.

Twelve-month yuan appreciation implied by NDFs, which moves inversely with the forwards, rose slightly to 1.50 percent measured from the Chinese central bank's daily mid-point, compared with 1.46 percent implied at Wednesday's close.

The NDFs' implied yuan appreciation has dropped sharply from a multi-month high around 2.5 percent in early June, hit by increasing signs that China is not likely to allow its currency to appreciate as uncertainties cloud its economic recovery.