UPDATE 1-Turkish markets fall, pulled lower by U.S. stocks

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ISTANBUL, Feb 5 (Reuters) - Turkish assets found no relief in softer inflation on Tuesday and weakened on the back of falling U.S. stocks, while investors eyed political tensions over a government plan to lift a ban on Muslim headscarves.

The main share index .XU100 fell 2.99 percent on the day to 44,350.78 points, after gains of a total 7 percent on Friday and Monday.

U.S. stocks fell after data showing a contraction in the U.S. services sector added to expectations of recession.

"The importance of U.S. data has increased greatly. As long as good news does not come from the states ... falls on the ISE-100 .XU100 will continue," said Meksa Invest Analyst Burak Urucu.

The losses came despite softer-than-expected Turkish inflation data after the close on Monday. Consumer prices rose a lower-than-expected 0.80 percent in January for an annual rate of 8.17 percent, and analysts said the numbers supported a sixth consecutive rate cut at the Central Bank's Feb. 14 meeting.

The lira <IYIX=> softened to 1.1775 against the dollar after closing at 1.1710, weaker than its Monday close of 1.1620, while the yield on the benchmark Oct. 7, 2009 bond <TRTSYSUM=IS> rose to 16.43 percent from Monday's close of 16.39 percent.

Turkey is underperforming its emerging market peers .MSCIEF, after faring better than average in 2007, and investors attribute that in part to a lack of positive news on reforms and privatisations.

Ankara has not yet given a timetable for key privatisations like that of Halkbank HALKB.IS and on Monday officials said a tender for Ankara's gas distribution network was postponed until March.