October 25, 2010 / 9:25 AM / 9 years ago

Turkish lira, stocks up on post-G20 risk appetite

* Petrol Ofisi shares up 5 pct on OMV takeover

* Central Bank builds dollar reserves to cap lira gains

* Bonds ease

ISTANBUL, Oct 25 (Reuters) - Turkish stocks and the lira rose on Monday on fresh appetite for riskier assets after a weekend G20 meeting did little to change investors’ view that the dollar would stay weak and emerging currencies and equities gain.

At 0840 GMT, the main share index .XU100 rose 0.68 percent, underperforming benchmark emerging stocks .MSCIEF, which were up 1 percent on the day at a one-week high -- their biggest one-day gain in over two weeks.

The lira IYIX= was firmer at 1.4140 against the dollar from a previous close of 1.418 on the interbank market, while the yield on the benchmark April 25, 2012, bond <0#TRTSYSUM=IS> rose to 7.72 percent from a previous close of 7.68 percent.

The lira hit its strongest level in two years two weeks ago at below 1.4 against the U.S. currency.

“The G20 meeting did nothing to change our initial view that the big imbalances will linger for a while longer in the global economy, and big risk for Turkey is that it gets swamped by the corresponding surpluses,” said economist Neil Shearing at Capital Economics.

The main driver of emerging market gains over the last month has been the expectation of more cheap money flowing into the market should the Federal Reserve further ease monetary policy next month to try and revive the ailing U.S. economy.

“Turkey’s currency will continue to do well. Policymakers will try and contain the lira but this may not have any effect. Short-term capital inflows will continue at an unsustainable level, increasing the risk of bubbles and a harder landing down the line,” Shearing added.

While shunning capital controls, Turkey’s central bank is using forex auctions to build its dollar reserves and contain a strengthening lira. The bank said on Monday it would buy up to a maximum additional $300 million in foreign exchange auctions between October 25-27 CBTQ after purchasing $700 million last week from the market.

Shares in Petrol Ofisi PTOFS.IS, Turkey’s largest chain of gas stations, rose more than 5 percent after Austrian shareholder OMV, the largest energy company operating in emerging Europe, agreed to raise its stake to 95.75 percent.

Shares of Dogan Holding (DOHOL.IS), which is selling a 54.17 percent stake in the long-sought deal, rose 3.81 percent to 1.09 lira.

Petrol Ofisi is Turkey’s main refined oil products marketing company and operates retail and commercial businesses.

Additional reporting by Alexandra Hudson; Editing by John Stonestreet

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