SHANGHAI (Reuters) - On Thursday, for the second straight day, China's yuan rose to its highest closing level against the dollar since its July revaluation, with the central bank stepping back from the market near the end of the session, dealers said.

The yuan hit 8.0535 per dollar just before the close to equal Wednesday's post-revaluation intraday high.

It finished at 8.0537 per dollar, up from 8.0545 on Wednesday. The daily mid-point was set at 8.0558.

"The central bank was conspicuously absent in the last few minutes of trading, allowing the yuan to hit new highs again," a Shanghai-based dealer at a foreign bank said.

"This week, the bank showed clear intentions to allow the yuan to rise steadily, though at a strictly controlled pace."

The yuan broke through 8.06 per dollar on Monday and dealers said the currency could strengthen beyond the next key level of 8.05 within two weeks.

They cited signs that the central bank encouraged gains in the yuan on Monday when it announced an unexpectedly strong mid-point for the domestic currency and that it had allowed the yuan to stand firmly above the 8.06 level since then.

The yuan can theoretically rise or fall 0.3 percent from its mid-point during the day, though it only moves a fraction of the range for most days.

Though the People's Bank of China is allowing the yuan to appreciate gradually, it will tightly control the rise, dealers said.

By Thursday's close, the yuan had appreciated only 0.7 percent since it was revalued in July by 2.1 percent to 8.11 per dollar.

The yuan weakened to 9.6470 per euro from Wednesday's 9.6400 but strengthened to 6.7880 per 100 yen from 6.8270.

One-year onshore yuan forwards were quoted at 7.8370 to the dollar on Thursday, anticipating the yuan would be 2.8 percent stronger in one year's time.