July 16, 2012 / 3:53 PM / in 5 years

UPDATE 1-Turkish markets steady, eyes on rate meeting

(Updates with closing figures)
    * Lira, bonds steady ahead of cbank meeting
    * Shares flat but Carrefour's Turkish unit jumps

    ISTANBUL, July 16 (Reuters) - Turkish bonds and the lira
were steady on Monday, unmoved by jobs and budget data as
investors readied for policy statements from Turkey's central
bank and the U.S. Federal Reserve later this week.
    Turkey's central bank holds a policy meeting on Thursday,
with markets seeking clues as to whether the bank is likely to
cut interest rates soon to shore up a slowing economy.
    The lira was at 1.8140 to the dollar, having
traded at 1.8136 late on Friday. Against its euro-dollar basket
 the currency stood at 2.0151 from a previous
    Finance Minister Mehmet Simsek said the government could
take additional measures to rein in the fiscal gap after data
showed the budget was 6.3 billion lira in deficit in June after
a surplus of 4.59 billion lira in May.
    Analysts have said year-end budget targets may be at risk
from slowing tax revenue as economic growth slows.
    Turkey's unemployment rate, meanwhile, dipped to 9 percent
in March to May, from 9.9 percent both in the previous three
months and the corresponding period of 2011, the statistics
institute said.
    The data had little impact on markets, which focused on
possible hints of further U.S. economic stimulus in testimony
this week from Federal Reserve Chairman Ben Bernanke. Any hint
of more stimulus could boost demand for emerging market assets.
    Some believe monetary policy easing is also imminent in
Turkey, following comments earlier this month from Central Bank
Governor Erdem Basci that the bank may cut its year-end 6.5
percent inflation forecast in July. 
    Traders expecting a move say the bank may consider narrowing
the interest rate corridor. The corridor is the difference
between the central bank's overnight borrowing rate, now at 5
percent, and its lending rate, which is at 11.5 percent. 
    "Given the recent lira appreciation and easing decisions by
other central banks, such a cut is certainly on the table this
week," Basak Karaaslan, an economist at Finansbank, wrote in an
e-mailed note.
    The bank is not expected to cut its main policy rate, the
one-week repo rate, this week from its current record low of
5.75 percent.
    The yield on the March 5, 2014, benchmark bond
 was virtually unchanged at 7.96 percent.
    Istanbul's main share index was virtually flat,
closing at 62,675.31 points, or up just 0.02 percent and roughly
line with a 0.05 percent rise in the MSCI emerging markets index
    Shares of Turk Telekom, the country's main
landline operator, fell 0.6 percent to 6.96 lira. It announced
second-quarter profit of 629.6 million Turkish lira ($347.58
million), below a Reuters forecast of 675 million lira.
    Shares in Carrefoursa, a venture between France's
Carrefour supermarket chain and Istanbul-based Sabanci
Holding, rallied as much as 9.2 percent before
closing up 3.5 percent at 16.25 lira after the Turkish
retailer's chairman and three other board members quit.
    Analysts said the move could signal that Sabanci, which has
said it is unhappy with the company's performance, plans to sell
its stake in the business. 
 ($1 = 1.8114 Turkish lira)

 (Writing by Ayla Jean Yackley; Editing by John Stonestreet and
Susan Fenton)

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