ISTANBUL, March 28 Turkish stocks firmed on Friday amid optimism of easing political tensions, with the ruling AK Party expected to do well in local elections which are seen as a referendum on Prime Minister Tayyip Erdogan, who is mired in a graft scandal.
Turkish assets proved resilient to the government's ban on YouTube, a week after it blocked access to microblogging site Twitter,, drawing international condemnation and market losses.
In the last week foreign capital inflows into Turkey were between $2 and $2.5 billion on expectations that a strong showing for the AK Party in Sunday's local vote and continuity in the political landscape.
The party got an added boost from Turkey's consumer confidence index which rose 5 percent to 72.7 points in March from 69.2 points a month earlier, but remained below 100 - indicating pessimism.
"The latest poll showed that the ruling AKP continues its lead over the opposition. As this is seen as the most-market friendly scenario, investors shrugged off other long-terms risks and the pre-election rally continued," said Garanti Securities strategist Tufan Comert. Analysts also said that any rally was likely to be short-lived.
The main Istanbul share index rose 1.82 percent to 68,266.77, outpacing the main emerging markets index, which was up 0.82 percent.
Turkey's 10-year benchmark bond yield was flat at 10.63 percent from Thursday's close.
The lira slipped slightly to 2.1938 from 2.1877 late on Thursday but was still close to its 3-week strongest.
"The lira generally moved in line with other members of the fragile 5 countries (Brazil, South Africa, India, Indonesia, Turkey) for the last week, decoupled yesterday - it is now equalizing with some short covering on very thin volume," Comert said. (Reporting by Dasha Afanasieva, additional reporting by Nevzat Devranoglu)