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* Planned sale comes amid renewed FX volatility, more yuan hubs
* March quarter set a record for offshore yuan bond sales (Adding details)
By Michelle Chen
HONG KONG, April 28 (Reuters) - China's Ministry of Finance will sell the biggest batch of yuan-denominated bonds it has offered in Hong Kong in a bid to boost the appetite among investors.
The MOF said on Monday it will issue 28 billion yuan ($4.48 billion) in offshore yuan bonds this year, the highest level since the issuer first tapped the dim sum market in 2009.
In 2013, the MOF issued only 23 billion yuan on bonds in Hong Kong. This year's jumbo-sized issuance comes as the former British colony's offshore market has been hit by sharp currency volatility and as authorities have moved to promote use of the Chinese currency in Europe and Asia.
Even before the MOF's announcement of its plan, the overall dim sum market has been buoyant. In the first three months of 2014, about 125 billion yuan in bonds - a record for any quarter - were issued. In the last quarter of 2013, issuance was 53 billion yuan.
China is accelerating the pace to expand the footprint of its currency and open up more channels for cross-border fund flows, in order to lift the global status of the yuan and make it match China's position as the world's second-largest economy.
The country's securities market regulator said this month it would allow cross-border stock investment between Shanghai and Hong Kong, another step towards opening China's capital account.
The first batch of the MOF's 2014 bonds, worth 16 billion yuan, will be sold on May 21 to institutional investors, foreign central banks and regional monetary authorities.
The rest will be offered to institutional investors and Hong Kong residents in the second half of the year.
Demand from institutional investors is expected to be robust as there is a lack of high-quality instruments in the offshore yuan market. (For a chart of quarterly offshore yuan bond issuance, see link.reuters.com/kyr38v)
Foreign central banks are also active buyers of high-quality dim sum bonds as they try to diversify their reserve portfolios. Last year, when the MOF sold dim sum bonds, about eight central banks participated, including ones from Asia, South America and Africa.
The MOF is the biggest and most prolific player in the primary market of dim sum bonds and its bond sales are a much awaited event among investors as it sets the tone for other issuers. This year's sales will make its issuance since 2009 top 108 billion yuan.
Despite the recent weakness of the Chinese currency, yuan payments rose in value by 29 percent in March from a month earlier and climbed one place to seventh position as a global payments currency with a market share of 1.62 percent, from 1.42 percent in February, global transaction services organisation SWIFT said on Monday.
China's renminbi has weakened more than 3.5 percent this year, wiping out its gains last year, and analysts expect more near-term weakness for the currency.
$1 = 6.2536 Chinese Yuan Editing by Saikat Chatterjee and Richard Borsuk