UPDATE 3-Turkish lira falls 2 pct on global woes

(Adds closing prices)

ISTANBUL, Feb 7 (Reuters) - Turkey's lira weakened as much as 2 percent on Thursday to around 2-week lows, hit by shrinking global risk appetite, while Turkish stocks fell more sharply than those in other emerging markets.

Turkish assets are particularly sensitive to shifts in global appetite as Turkey has a gaping current account deficit and large amounts of foreign portfolio investment both in high-yielding lira bonds and the stock market.

Foreign ownership of the stock market is over 70 percent and the market is more liquid than rivals, which also makes it vulnerable to sell-off.

The lira <IYIX=> ended at 1.2085 against the dollar on the interbank market, having earlier fallen as far as 1.21. Traders said it was following other emerging market currencies lower.

It rebounded in Friday-dated trade and at 17:05 stood at 1.2020.

"It's contagion, from other emerging markets. First it was the rand, then the Hungarian forint, now the lira," said JP Morgan Chase economist Yarkin Cebeci, noting the three currencies were all vulnerable because of large current account deficits.

"It's not a very fast capital outflow or anything, just a worsening of the international environment, plus the appreciation of the euro against the dollar," Cebeci said, adding he saw the currency at 1.21 at the end of the month.

European stocks , which Turkish assets tend to follow, fell two percent and the yen, which investors borrow to buy the high-yielding lira, rose in a sign of risk aversion.