Turkish assets weaken after explosion at Syrian border

ISTANBUL Mon Feb 11, 2013 11:46am EST

ISTANBUL Feb 11 (Reuters) - Turkey's financial markets weakened on Monday after a car exploded at a crossing on the country's border with Syria.

By 1546 GMT, the lira had eased to 1.7758 to the dollar from 1.7700 late on Friday. Against its euro-dollar basket it weakened to 2.0757 from 2.0688.

"Expectations of a rate cut by the central bank weighed on the lira ... The explosion at the Syrian border also affected Turkish assets negatively," said Tufan Comert, strategist at Garanti Securities.

The explosion, near the Turkish town of Reyhanli, killed at least nine people and wounded dozens more, officials said.

Analysts are also watching for signs that Turkey's central bank may ease monetary policy further to stop the lira strengthening too much and to support the economy.

The yield on the two-year benchmark bond closed at 5.74 percent from Friday's close at 5.69 percent with investors awaiting a treasury tap of a 14-month zero-coupon bond on Tuesday.

Istanbul's main share index closed down 1.82 percent at 77,255.83 points, underperforming a fall of 0.27 percent in the global emerging markets index. Analysts said the fall became sharper after the border explosion.

Shares in Turkish white-goods maker Arcelik fell 2.67 percent to 10.95 lira after the company's fourth quarter net profit at 99.6 million lira ($56 million) came in far below a Reuters forecast of 145 million lira, despite a rise of 8.3 percent from a year ago. (Writing by Seltem Iyigun; Editing by Ruth Pitchford)