ISTANBUL (Reuters) - Turkey's government vowed to press on with its reform plans on Monday after victory in a referendum on constitutional change which boosted markets and the AK Party's prospects of winning a third term in power.
Approval of the charter led to a flurry of applications by rights groups to prosecute the leaders of a 1980 military coup, who were stripped of immunity by one of the changes in the reform package.
No sooner had Prime Minister Tayyip Erdogan declared victory in Sunday's plebiscite than he aroused Turkish secularists' worst fears by serving notice that the AK, which has roots in political Islam, would start work on a new constitution.
The referendum outcome fired up financial markets, sending shares to a record high, and the finance minister said it provided an opportunity to extend Turkey's reform programme.
The "yes" vote was 58 percent to 42 percent for the "no" camp, according to unofficial results. The turnout, in an electorate of just under 50 million, was 77 percent.
"'Yes', but it is not enough," said a headline in the liberal newspaper Radikal, saying the result showed enthusiasm for change and the desire for a totally new constitution.
Turks voted on the 30th anniversary of the 1980 coup, and Erdogan had whipped up public support to change a charter written during army rule by reviving memories of the repression that followed the generals' takeover.
"Turkey cleans away the shame of the coup," said a headline in the pro-government Sabah newspaper.
Rights groups leapt into action after the vote, filing petitions with the Ankara prosecutor's office to prosecute the leaders of the coup, including former president Kenan Evren, for crimes against humanity.
After the coup, about 50 people were executed, hundreds of thousands were arrested, many were tortured, hundreds died in custody and many disappeared.
Evren, 93, has defended the coup, saying it brought an end to years of violence between left-wing and right-wing factions in which about 5,000 people were killed.
Turkish assets rallied as investors viewed the results of the referendum as a boost for stability and for the prospects of the government winning a third term in a parliamentary election due by July 2011.
Equities rose more than 2 percent to a record high, the lira reached its strongest levels against the dollar in a month and the benchmark bond yield shed as many as 11 basis points.
Economist Timothy Ash at RBS said the 'yes' voted would be perceived as a sign of support for modernisation and reform as Turkey moves towards European Union accession.
"Second, the vote is a huge victory for Turkey's ruling AK Party, especially given the opposition had attempted to make this a vote of confidence in the government," he said.
Opponents fear an emboldened AK Party will unleash a hidden Islamist agenda if it wins another term in the next election, although Erdogan denies any plan to roll back modern Turkey's official secularism.
Many reforms approved in Sunday's poll were uncontroversial, but changes to the way senior judges are selected have raised concern that the judiciary will lose its independence.
The country's chief prosecutor, who had narrowly failed in 2008 to have the AK Party banned for being a focal point of Islamist activity, weighed in on the controversy.
"As judges, our determination to protect the independence of judiciary continues, even in the face of changing constitution and laws," Supreme Court of Appeals Chief Prosecutor Abdurrahman Yalcinkaya said.
Critics believe the AK government will push through legislation without fear of the Constitutional Court blocking its way, as it did in 2008 when it struck down moves to remove a ban on women attending university from wearing Muslim headscarves.
Coming from Islamist parties banned in the late 1990s, AK Party leaders liken their movement to Europe's conservative Christian Democratic parties.
Erdogan's government has won over many Turks by spearheading a drive to join the EU and overseeing reforms and a period of unprecedented economic growth which have transformed Turkey from a financial basket case into a star emerging market.
Finance Minister Mehmet Simsek told Reuters approval of the reforms reinforced macroeconomic and political stability.
"This will boost confidence in Turkey. This will provide an opportunity to broaden and deepen our reform programme."
The secularist opposition's poor showing was crowned by a mix-up that prevented Kemal Kilicdaroglu, chairman of the Republican People's Party (CHP), from voting. The CHP has pinned hopes on Kilicdaroglu to galvanise the party of Turkey's founder, Mustafa Kemal Ataturk, before next year's vote.
Additional reporting by Orhan Coskun and Alexandra Hudson; Editing by Charles Dick