ISTANBUL, Nov 3 (Reuters) - Turkish assets weakened further on Tuesday as worries about sluggish economic recovery and signs Ankara plans to raise special consumption tax amid hefty borrowing next year continued to depress the mood of investors.
Trading in all Turkish assets was quiet ahead of October inflation data due at 1500 GMT.
The lira slipped to 1.5070 against the dollar on the interbank market after a close on Monday of 1.4960. The Turkish currency has made only slim gains this year, and has slipped from a 2009 high of 1.4389 in mid October.
The yield on the benchmark Aug. 3, 2011, bond rose to 8.84 percent from a previous close of 8.74 percent. Signs the central bank will start to slow its unprecedented interest rate cutting cycle have weakened appetite for Turkish government bonds.
'Bonds and equities are under pressure and there is a lack of buyers in both ... low volume and adverse movements are the name of the game. I think this will continue for a while more,' said a trader in Istanbul.
'The fiscal performance is not good and that gives people more stress. If you look at the spread between overnight rates and the benchmark it has widened a lot in the last month.'
The overnight borrowing rate now stands at 6.75 percent.
Analysts at Tera Securities cited comments by Finance Minister Mehmet Simsek that an increase in special consumption tax was likely as the government struggles to reach its tax revenue target and suggested tobacco and alcoholic drinks could be first in line for tax hikes.
The main stock index traded down 2.2 percent to 46,346.95 points, after a late rebound on Monday helped it close up 0.58 percent. It underperformed the MSCI index of emerging markets which traded down 1.11 percent.
Shares in companies owned by Turkey's beleaguered Dogan Holding, whose media unit Dogan Yayin Holding is subject to a massive tax fine, held Monday's large gains, driven by expectations Dogan Holding will have to divest some of its assets to meet the charge.
By 0834 GMT Dogan Yayin shares traded up 3.31 percent at 1.25 Turkish lira, Dogan Holding shares were flat at 1.09 lira while Ditas Dogan, a unit supplying suspension parts to the automotive industry traded up 12.18 percent at 2.67 lira.
The tax row has drawn parallels with Russia's treatment of oil giant YUKOS, which was crippled by a huge tax bill its owners said was politically motivated.
(Reporting by Ceyda Caglayan and Alexandra Hudson; editing by Chris Pizzey) Keywords: MARKETS TURKEY/ (alexandra.hudson@reuters.com; +90 212 7012; Reuters Messaging: selcuk.gokoluk.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Trading in all Turkish assets was quiet ahead of October inflation data due at 1500 GMT.
The lira slipped to 1.5070 against the dollar on the interbank market after a close on Monday of 1.4960. The Turkish currency has made only slim gains this year, and has slipped from a 2009 high of 1.4389 in mid October.
The yield on the benchmark Aug. 3, 2011, bond rose to 8.84 percent from a previous close of 8.74 percent. Signs the central bank will start to slow its unprecedented interest rate cutting cycle have weakened appetite for Turkish government bonds.
'Bonds and equities are under pressure and there is a lack of buyers in both ... low volume and adverse movements are the name of the game. I think this will continue for a while more,' said a trader in Istanbul.
'The fiscal performance is not good and that gives people more stress. If you look at the spread between overnight rates and the benchmark it has widened a lot in the last month.'
The overnight borrowing rate now stands at 6.75 percent.
Analysts at Tera Securities cited comments by Finance Minister Mehmet Simsek that an increase in special consumption tax was likely as the government struggles to reach its tax revenue target and suggested tobacco and alcoholic drinks could be first in line for tax hikes.
The main stock index traded down 2.2 percent to 46,346.95 points, after a late rebound on Monday helped it close up 0.58 percent. It underperformed the MSCI index of emerging markets which traded down 1.11 percent.
Shares in companies owned by Turkey's beleaguered Dogan Holding, whose media unit Dogan Yayin Holding is subject to a massive tax fine, held Monday's large gains, driven by expectations Dogan Holding will have to divest some of its assets to meet the charge.
By 0834 GMT Dogan Yayin shares traded up 3.31 percent at 1.25 Turkish lira, Dogan Holding shares were flat at 1.09 lira while Ditas Dogan, a unit supplying suspension parts to the automotive industry traded up 12.18 percent at 2.67 lira.
The tax row has drawn parallels with Russia's treatment of oil giant YUKOS, which was crippled by a huge tax bill its owners said was politically motivated.
(Reporting by Ceyda Caglayan and Alexandra Hudson; editing by Chris Pizzey) Keywords: MARKETS TURKEY/ (alexandra.hudson@reuters.com; +90 212 7012; Reuters Messaging: selcuk.gokoluk.reuters.com@reuters.net) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
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