January 7, 2013 / 4:56 PM / in 5 years

Turkish bond yields down, shares in small banks jump

ISTANBUL, Jan 7 (Reuters) - Turkish bond yields fell and the lira firmed on Monday after investors flocked to two government debt auctions, with several more due this month.

The treasury raised 5.05 billion lira ($2.8 billion) through two bond tap issues, paying less than expected as high yields attracted heavy bidding, pushing down yields on the secondary market.

The yield on the two-year benchmark bond closed at 6.27 percent, down from Friday’s close of 6.37 percent.

“The decline in bond yields was in line with the strong bids in the taps. It also positively affected the lira,” said Nilufer Sezgin, chief economist at Erste Securities.

“It seems that the treasury will not have any difficulty reaching its borrowing target (in January),” she added.

By 1553 GMT, the lira firmed to 1.7805 to the dollar from 1.7837 late on Friday. Against the euro-dollar basket it was flat at 2.0550.

Istanbul’s main share index closed up 0.83 percent at 80,224 points, after hitting a record high of 80,443.67 points, outperforming a fall of 0.2 percent in the global emerging markets index.

Shares in small banks were among the sharpest gainers after a report in Turkish financial weekly magazine Ekonomist that Qatar’s Doha Bank was interested in buying a small Turkish lender.

Shares in Tekstilbank closed up 14 percent while Sekerbank rose 7.5 percent.

“Looking at the Turkish banking system, Tekstil Bank looks like the closest candidate for Doha Bank,” analysts at Ata Invest said in a research note. (Writing by Seltem Iyigun; Editing by Nick Tattersall)

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