SHANGHAI, Oct 15 (Reuters) - China's central bank lifted its official yuan midpoint to the highest level in a month on Tuesday, reflecting strong gains in the spot yuan a day earlier following signs of progress in Sino-U.S. trade negotiations that raised hopes for an end to the long trade war.

The People's Bank of China (PBOC) set the midpoint rate at 7.0708 per dollar prior to the market open, 17 pips stronger than the previous fix of 7.0725 and the strongest since Sept.16.

Before Tuesday, the PBOC had persistently set its official guidance rate at around the 7.0370 per dollar level for 15 straight trading days and at levels that were much stronger than market projections.

Onshore spot yuan finished the domestic session at a one-month high against the dollar on Monday.

U.S. President Donald Trump on Friday outlined the first phase of a deal to end a trade war with China and suspended a threatened tariff hike, though officials on both sides said much more work needed to be done.

(Reporting by Winni Zhou and Andrew Galbraith; Editing by Kim Coghill)