Turkish PM, army chief meet amid political tension

ANKARA, Jan 8 (Reuters) - Turkey's prime minister and the head of the powerful military held unscheduled talks on Thursday which local media linked to a widening probe into an alleged plot to topple the Islamist-rooted AK Party government.

News of the meeting added to tensions between the secularist establishment and the AK Party in the European Union-candidate country, where financial markets have already been hit by a global financial crisis.

A source at Prime Minister Tayyip Erdogan's office confirmed Erdogan and armed forces chief General Ilker Basbug met, but declined to comment on the subject of the talks, which came a day after Turkish police detained about 40 people including three retired generals and active military officers.

Basbug subsequently left for regular talks with President Abdullah Gul.

Turkish shares extended losses, trading down more than 5 percent on Thursday. The lira also fell.

Eighty-six people, including retired army officers, politicians and lawyers, are on trial charged with being part of a right-wing group in a case that has shattered taboos by opening the powerful military to judicial investigation.

Critics of the ruling AK Party say Erdogan's government is using the case as revenge for court moves by the secular establishment last year to outlaw the party for anti-secular activities. The AK Party denies any link. (Reporting by Zerin Elci; editing by Philippa Fletcher)