Turkish shares down; Turkcell falls, Moody's eyed

Mon Jan 28, 2013 4:52am EST

* Shares down

* Bonds, lira flat

* Moody's conference eyed

By Seda Sezer

ISTANBUL, Jan 28 (Reuters) - Turkish shares fell on Monday, led by a decline in Turkcell shares, while bonds and the lira were little changed ahead of a teleconference by Moody's to discuss Turkey's credit rating.

The main Istanbul share index dropped 1.16 percent to 83,800.11 points, underperforming a fall of 0.44 percent in the global emerging markets index. The market hit its highest ever level on Thursday.

The fall was driven by a fall of 0.83 percent in Turkey's largest mobile phone operator Turkcell to 11.90 lira, after a top British appeals court said it may give its final verdict on the dispute between Turkey's Cukurova Holding and its Russian partner in mobile phone company Turkcell on Wednesday.

Investors eyed rating agency Moody's teleconference to discuss Turkey "shifting closer" to investment grade, which will be held at 1500 GMT. It rates Turkey just below investment grade at Ba1.

"In our view, rating agencies will have a window of opportunity to upgrade Turkey until 1Q 2013, after which the current account deficit will start increasing as a percentage of GDP as well," said Finansbank analyst Deniz Cicek in a note.

"So, if we do not see a rating upgrade by Moody's by the end of 1st quarter, we think chances of Turkey reaching a second investment grade this year will diminish."

Turkey is hoping another major ratings agency will lift it to investment grade, after Fitch did so last November. A second upgrade would enable Turkey to join benchmark investment grade bond indexes, a status that many funds require before investing.

The yield on the two-year benchmark bond inched up at 5.91 percent, from Friday's close at 5.88 percent.

By 0939 GMT, the lira was at flat 1.7698 to the dollar. Against its euro-dollar basket it slightly eased to 2.0751, from to 2.0742. (Writing by Seda Sezer; Editing by Toby Chopra)

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