UPDATE 1-Turkish lira eases as investors wonder if rate hike was enough
* Central bank hikes lending rate 50 bps
* Lira eases as market question if move enough
* Bond yields broadly steady (Recasts after rate decision)
By Dasha Afanasieva
ISTANBUL, Aug 20 (Reuters) - The Turkish lira eased on Tuesday and bond yields were steady as investors questioned whether a surprise interest rate hike would be enough to combat fears about a reduction in U.S. stimulus.
The central bank raised its overnight lending rate for a second straight month to prevent a slide in the lira as worries about a tapering in the U.S. Federal Reserve's bond-buying programme hurt emerging market currencies.
The lira initially firmed against the dollar following the 50 basis point hike, but later weakened to 1.9495 from 1.9370 late on Monday as investors digested the move.
The yield on the 10-year bond fell to 9.14 percent after the central bank's announcement, but later rose again to 9.36 percent, almost its level at Monday's close.
"The positive reaction of long term bond yields and the exchange rate to the decision remained limited and short lived as the market found the measures insufficient to curb volatility in exchange rates," said a note from Ekspres Invest.
Growing expectations that the U.S. Federal Reserve may soon start tapering its stimulus programme has hit appetite for emerging markets in general, with Turkey's large current account deficit leaving it particularly vulnerable.
Investors are keen to see signs that the central bank is committed to tightening liquidity to keep the lira steady.
The main Istanbul share index closed down 0.25 percent at 72,204.25, but outperformed the broader emerging markets index, which was down 1.14 percent. (Editing by Nick Tattersall, Ron Askew)
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