Turkey’s bond yields rose for the first time in four days and the lira weakened on concern of an escalation in conflict with neighboring Syria after a bomb attack killed nine in the southern city of Gaziantep.
Yields on two-year benchmark debt climbed eight basis points, or 0.08 percentage point, to 7.81 percent by 1:39 p.m. in Istanbul, heading for the biggest gain in more than a week. The lira weakened less than 0.1 percent to 1.7948 per dollar, falling from the highest level since Aug. 10.
The bombing on the second day of a three-day religious holiday came after several clashes in the southeast between the army and the Kurdistan Workers’ Party or PKK. The group, which is classified as a terrorist organization by Turkey, the U.S. and the European Union, has been fighting for autonomy in largely Kurdish southeast Turkey for three decades. Gaziantep province borders Syria.
“Terror is causing market stress and tension,” Murat Yardimci, head of trading at ING Bank AS, said in e-mailed comments. Investors are pricing “the possibility of continuation of these attacks and an intervention on Syria.”
Turkish authorities will also examine the possibility of Syrian involvement in the attack, Huseyin Celik, deputy head of the governing Justice and Development Party, told NTV television, adding Syrian intelligence has been working with the PKK.
The central bank lent today 1 billion liras ($557 million) at its lowest 5.75 percent funding rate, the same amount provided last week in its one-week repurchase agreements auction.
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