Turkish government vows to press on over president

ANKARA (Reuters) - Turkey's Islamist-rooted government vowed on Tuesday to press on with presidential elections after the top court annulled the first round, but early parliamentary polls appeared increasingly likely.

The government's decision set the stage for another test of wills on Wednesday with Turkey's secularists, including the army that has threatened to intervene and sees itself as the final guarantor of the country's secular system.

Prime Minister Tayyip Erdogan could be forced to call early national elections to resolve the standoff in the predominantly Muslim European Union candidate country.

The Constitutional Court annulled last week's first round vote in parliament after an appeal by the secularist opposition, which rejects the ruling AK Party's candidate, Foreign Minister Abdullah Gul, because of his Islamist past.

Government spokesman Cemil Cicek said parliament would hold another vote on Gul's candidacy on Wednesday but later a senior AK Party member, Sadullah Erdin, said no ballot would take place until a parliamentary committee had met to fix a new timetable.

"The situation has become so confused," said Semih Idiz, a veteran columnist for the liberal Milliyet daily newspaper.

Turkey's financial markets recorded their biggest falls in a year on Monday and the currency lost more ground on Tuesday, as concern grew about possible instability after an anti-government rally of up to one million on Sunday and the army's threat.

ISTANBUL VIOLENCE

Earlier on Tuesday, riot police fired teargas and used water cannon to break up crowds of leftist May Day protesters in Turkey's largest city and business hub Istanbul but the violence was not directly linked to the presidential standoff.

The Constitutional Court ruled not enough parliamentarians were present when the first round vote was held in the 550-seat assembly last week.

Gul said if, as expected, the government again fails to ensure the required quorum of 367 legislators, or two-thirds of the chamber, Turkey would have to call early national elections. The AK Party has 352 deputies.

Under ballot rules, Gul is the only presidential candidate and no one else can be nominated now the process is under way.

Secularists suspect Erdogan and Gul, both former Islamists whose wives wear the Muslim headscarf banned from state institutions, of wanting to break Turkey's strict separation of state and religion.

They reject the charge and point to their pro-Western record in office.

The army has ousted four governments since 1960, the last in 1997 when it acted against a cabinet in which Gul served.

Economy Minister Ali Babacan said Turkey, which has a $400 billion economy, was ready for early elections -- a comment widely seen as an attempt to calm markets.

On Monday, Erdogan went on national television to appeal for national unity in a clear attempt to ease the confrontation.

Parliament elects the president for a seven-year term.

The dispute stems from a divide between Turks who want to keep a strict separation of state and mosque and a growing more religiously minded class who have prospered under Erdogan and want a relaxation of curbs on religious symbols and expression.

(Additional reporting by Gareth Jones in Ankara and Emma Ross-Thomas in Istanbul)