* Ukraine crisis weighs on Turkish market sentiment
* Strong earnings from Turkcell, steel maker lend support
ISTANBUL, April 25 (Reuters) - Turkish banking shares led the main stock index lower on Friday, weighed down by the Ukraine crisis, but losses were cushioned by strong first quarter results from Turkey’s largest mobile phone operator and by a leading steel company.
Turkey’s banks were the worst performers on the bourse after the central bank on Thursday defied some analysts’ expectations by not announcing moves to pay interest on banks’ reserve requirements to support the sector. The central bank also kept its main interest rates on hold.
Regional tensions also took their toll on shares after Ukrainian forces killed up to five pro-Russian separatists on Thursday and Russia conducted military drills near the border, raising fears that it may be gearing up to invade Turkey’s Black Sea neighbour.
“A worsening risk appetite due to the escalating unease in Ukraine has weakened performance in Turkish equities, while the central bank’s decision of almost no rate cuts has contributed to the downside trend,” said Gokce Celik, analyst at Finansbank.
The Istanbul stock market was down 0.68 percent at 71,896.42 points by 1015 GMT but outperformed the emerging market index, which fell 0.76 percent.
But first quarter results of two major Turkish firms provided some relief.
Turkey’s largest flat steel maker Erdemir posted an 89 percent increase in first-quarter net profit on Thursday to 432.4 million lira, which analysts said surpassed expectations, leading to a more than 1 percent rise in its share price.
Shares in Turkey’s largest mobile phone operator Turkcell traded 0.43 percent higher on Friday after it posted a rise in core earnings in the first quarter.
Turkish white goods maker Arcelik was expected to post its first quarter results later in the session.
The lira was broadly steady at 2.1365 to the dollar from 2.1362 late on Thursday, when the central bank ignored political pressure to cut borrowing costs.
The 10-year benchmark bond yield traded at 9.95 percent from 9.97 percent at Thursday’s close. (Reporting by Dasha Afanasieva; Editing by Gareth Jones)