Turkish stocks followed global markets lower on Monday on disappointment over the outcome of the G20 summit, but the lira strengthened some 1 percent on signs that Turkey and the IMF may agree a new deal soon.
IMF Managing Director Dominique Strauss-Kahn said at the weekend that the Fund had not reached an accord for a new loan deal with Turkey but he was confident that agreement would come rapidly.
Turkish media reported that Prime Minister Tayyip Erdogan had said the two sides were the closest they have been to resolving their differences.
"Both Erdogan and the IMF (managing director) hinted that Turkey is close to signing a deal with the fund. This would finally provide the long-awaited anchor for economic policies and reduce risk perception for external financing," brokers at Tera wrote in a research note. "This is welcome news but it would still not be enough for a sustainable market recovery."
The index of leading Istanbul shares closed the morning session down 2.03 percent at 24,909 points, underperforming the MSCI emerging market index which traded down only 0.8 percent.
Shares in Turkish Airlines outperformed, however, jumping 8.2 percent to 5.02 lira ($3.09) after the flag carrier's third-quarter earnings were higher than expected.
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