Turkish lira firms 2 percent after holiday, stocks steady

Failure to pass a $14 billion carmaker bailout in the U.S. Senate pushed up U.S. government debt and dragged down the dollar in global markets. The dollar fell to below 90 yen , its lowest in 13 years.

The lira traded at 1.5530 against the dollar on the interbank market in morning trade, down 2 percent from 1.5840 a week ago. The main Istanbul share index rose 0.59 percent to 24,177 points, outperforming the MSCI index of emerging market shares which traded 3.31 percent lower.

Turkish markets were closed from Monday to Thursday for a public holiday to mark the Muslim Eid al-Adha feast.

'The dollar fell against other major currencies during the holiday. We saw lira traded at a low of 1.52 during the holiday and collapse of U.S. bailout plan for auto sector contributes to the negative sentiment,' said one trader.

Euro and yen appreciation against the dollar and expectations of new interest rate cuts in the United States helped the lira gain against the greenback. Lower U.S. interest rates encourage capital flight to higher-yield emerging markets.

But the strong lira level may not be a correct indicator due to thin trade volumes and the currency may soften against the dollar later on Friday, said the same trader.

The yield on the June 23, 2010 benchmark opened lower at 18.57 percent on Friday versus last week's closing level at 18.63 percent.

Markets will be watching any clues whether Turkey will sign a loan agreement with the International Monetary Fund after its $10 billion stand-by accord expired in May.

Economy Minister Mehmet Simsek will go to Washington in the coming days for the final stage of loan talks with the IMF, Referans newspaper reported on Friday.

Government sources told Reuters last week that Turkey was expected to seek a $25 billion loan deal with the IMF in the form of an 18-month stand-by deal. Turkey hopes a deal with IMF will help restore confidence as its economy sharply slows down.