Turkish stocks fall on political worries

Published May 30th, 2001 - 02:00 GMT

ISTANBUL, (Reuters) - Turkish shares fell more than one percent on Tuesday, May 29, on political worries, reversing the early gains on the approval of a bank reform law, brokers said. 

 

The main Istanbul National-100 index ended 1.51 percent lower at 11,060.95, below a key support level around 11,100. It brushed a low of 10,758 before a minor rebound. 

 

Brokers said that low demand for a 13-month bill auction on Tuesday, as well as rising bond yields and the weaker lira, all reflected a lack of confidence. 

 

"The market is concerned. Any disagreement triggers fears related with government," said Engin Dalbudak at Alternatif Securities. Signs of a rift in the government over subsidies for farmers at Monday's cabinet meeting had pulled the index more than six percent lower on Monday. The coalition leaders later reached an agreement on grain prices, but the price rise agreed was higher than targeted year-end wholesale inflation of 57.6 percent. 

 

The grain price was closely watched as a sign of government commitment to running a tight budget in line with promises to the IMF in exchange for loans to help overcome a crisis. 

 

The market's initial rise was partly in response to the president's ratification of a banking law, a crucial element of a new economic program backed by IMF and World Bank loans. 

 

But concerns about political stability outweighed relief over the banking law. 

 

Daily turnover rose to 402.87 trillion turkish lira ($356.4 million) from Monday's 297.85 trillion. Decliners outnumbered gainers by 241 to 37 while 19 were unchanged. 

 

Among the most heavily traded stocks were commercial banks Yapi Kredi Bankasi , unchanged at 4,900 and Garanti Bankasi , down 1.52 percent at 6,500. 

 

Banks account for much of the index and are often a barometer of sentiment in the market. ($1=1130000 Turkish Lira)  

© 2001 Mena Report (www.menareport.com)

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