Turkish stocks lose nearly 1.5 pct, as the global worries persist

The benchmark 100-index of Istanbul Stock Market (ISE) closed 1.56 percent down at 32,216 at the end of the day. Turkish stocks fell nearly 5 percent early in the day to their lowest level in three years on a wave of risk aversion exacerbated by market closures in neighboring Russia. The ISE has traded in the red for four successive days and lost 13.19 percent since Monday when U.S. investment bank Lehman Brothers stunned markets by filing for bankruptcy.The yield on Turkey's April 14, 2010 benchmark bond rose to which broke the critical 20 percent level in the morning session later eased slightly below this level, while lira recovered back to Wednesday's closing levels.The lira also weakened as much as 2 percent against the dollar to early May levels in the morning trade regained its losses and rose nearly half percent.

The Turkish Central Bank is not expected to react to the currency as it floats below the 1.40 level against the dollar. "Through 1.40 would mark a clear deterioration in sentiment, the lira descending to new lows for the year and testing levels not seen since the subprime first hit last year, despite increased carry costs for U.S. dollar longs, " Tim Ash, RBS CEEMEA research director said in a written statement.

Analysts said it would take time to change the negative sentiment in the markets. "The news that Morgan Stanley and Wachoiva on the verge of a merger have been perceived as negative, because this shows that we are facing a very serious situation," Tuncay Tursucu, director of research at Meksa brokerage said.

"Precautionary measures have been taken by central banks. The Fed always makes important intervention moves. We see that it is confidence that the markets are looking for, rather than the liquidity," he also said.MORE MONEY INJECTED TO MARKETS

The cost of borrowing dollars short-term tumbled and world stocks rallied on Thursday after leading central banks unveiled concerted action to free up money money markets jammed by banking sector strife.

A $21.7 billion deal by British bank Lloyds TSB to buy HBOS to prevent another UK victim of the global credit crisis also helped ease investor jitters after U.S. stocks hit a three-year low on Wednesday.

Six of the world's top central banks announced a series of measures to pump more than $180 billion in extra dollar funds into global money markets which had virtually frozen up this week after upheaval on Wall Street.

The U.S. Federal Reserve said it was extending currency swap arrangements with other central banks by $180 billion to fund the extra liquidity operations.

After the announcement, dollar overnight interbank rates indicated on Reuters slid to 2 percent, compared with around 5.03 on Wednesday. Three-month interbank rates remained more than 250 basis points above expected U.S. interest rates.

"Any steps that help ease the liquidity problems, particularly ahead of end-quarter, are welcome," Sean Callow, currency strategist at Westpac in Sydney told Reuters.

"But markets know that central banks don't own a magic bullet, otherwise they would have used it already. And we've seen these sorts of steps before; it only addresses one of the symptoms of the underlying crisis."

In a volatile session, the FTSEurofirst 300 index rose 1.1 percent. MSCI main world equity index rose 0.5 percent -- only the third time this month it has risen on the day. The index earlier hit its lowest level since November 2005, leaving it more than 11 percent down this month.

U.S. stock futures were pointing to a firmer open on Wall Street later.