UPDATE 2-China launches yuan gold fix to boost power in global bullion market

* Benchmark price to be set twice daily

* Bullion industry long dominated by London

* China top producer, importer, consumer of gold (Adds afternoon price, comments by participant, production figures)

SINGAPORE/SHANGHAI, April 19 (Reuters) - Top gold consumer China launched a yuan-denominated gold benchmark on Tuesday, in an ambitious move to exert more control over pricing of the metal and influence in the global bullion market.

The benchmark is a culmination of efforts by China over the last few years to reform its domestic gold market, attempting to gain a bigger say in the bullion industry, long dominated by London where the global spot benchmark price is set.

As the world’s top producer, importer and consumer of gold, China has baulked at depending on a dollar price in international transactions, and believes its market weight should entitle it to set the price of gold.

The new benchmark may not be an immediate threat to London, but with time and full convertibility of the yuan it could become widely used and help China’s efforts to boost the global use of its currency.

The Chinese benchmark price, derived from a 1 kg-contract traded by 18 participants on the Shanghai Gold Exchange (SGE), was set at 256.92 yuan per gram ($1,234.49 per ounce) in Tuesday’s morning session.

The afternoon price was set at 257.29 yuan per gram.

“The Shanghai gold benchmark will provide a fair and tradable yuan-denominated gold fix price ... will help improve yuan pricing mechanism and promote internationalisation of the Chinese gold market,” Pan Gongsheng, deputy governor of the People’s Bank of China, said at the launch in Shanghai.

The benchmark price will be set twice a day following a few minutes of trading in each session. The London benchmark, quoted in dollars per ounce, is set via a twice-daily auction on an electronic platform.

The members in the yuan gold-fixing process include China’s big four state-owned banks, Standard Chartered, ANZ , Swiss-based precious metals house MKS, and jewellery retailers and gold miners.

“It’s a market of 1.2 billion people and simply cannot be neglected,” MKS Chairman Marwan Shakarchi said on Tuesday. “I am convinced that in the future we won’t say China is at a premium or discount to London, but vice versa.”

China produced 450.05 tonnes of gold last year, followed by Australia’s 285 tonnes, and consumed 985.9 tonnes, pipping India’s 849 tonnes.

The yuan price will be complementary to the prices in London and futures trading hub New York, the World Gold Council (WGC) said.

The launch of the yuan gold benchmark does not necessarily mean all market participants in China will begin to use the price for imports, sales and other transactions.

While domestic players could start to use the price immediately, foreign suppliers might have reservations. The London price has for over a century been accepted as the benchmark price.

“(They) are aware it is a time consuming process. It is not going to happen in one day, one month or even one year,” a source familiar with SGE’s thinking said.

“China has to show to the world over a consistent period of time that the price is open, rational, reasonable and that there is no manipulation.”

Transparency in the fixing process has come under scrutiny since a scandal broke in 2012 over the rigging of the London interbank offered rate, or Libor.

The London gold fix, previously set via a teleconference among banks and facing allegations of manipulation, was replaced in 2015 by electronic auctions. ($1 = 6.4732 Chinese yuan renminbi) (Additional reporting by Jan Harvey in London; Editing by Ed Davies, Veronica Brown and Susan Thomas)