Turkey's lira eases to 2.7 vs dollar as election nears (updated)

Akenerji Elektrik Uretim AS

04/06/2015 11:57

* Investors concerned about possibility of coalition 
government 
    * Shares drop 1.8 percent after two days of gains 
    * Energy stocks hit by website story 
 
 (Adds energy shares fall, details) 
    By Daren Butler 
    ISTANBUL, June 4 (Reuters) - The Turkish lira slipped to 2.7 
to the dollar on Thursday as the U.S. currency gained globally, 
while concerns that Sunday's parliamentary elections could 
result in a coalition government continued to weigh on 
sentiment. 
    Many investors hope Sunday's vote will result in the ruling 
AK Party securing a majority, which would ensure continuity, but 
without winning enough seats to boost the powers of President 
Tayyip Erdogan, seen by critics as an increasingly authoritarian 
figure. 
    But recent polls have suggested the AKP, which Erdogan 
founded and which he wants to push through constitutional change 
establishing an executive presidency, may have to form a 
coalition government. Analysts fear such an outcome could lead 
to policy paralysis or trigger fresh elections. 
    The lira  TRYTOM=D3  weakened as far as 2.7061 from 2.6895 
late on Wednesday, also hit by gains in the dollar, which 
benefited from data pointing to a pick-up in the U.S. economy. 
    The Turkish currency has weakened nearly 14 percent this 
year, making it one of the worst performers among emerging 
market currencies. It was approaching its record low of 2.7435 
which it hit on April 24.  
    Shares also came under pressure after two days of strong 
gains. 
    "Given the uncertainty around the general election at the 
weekend, we don't expect the upwards momentum to be lasting 
after the positive trend in the BIST yesterday," Oyak Invest 
said in a research note. 
    The main Istanbul share index  .XU100  fell 1.82 percent to 
81,876.35 points. 
    Energy sector shares  .XELT  fell 3 percent after a bourse 
news website issued a story saying an unnamed company in the 
sector was facing financial difficulties. 
    Akenerji  AKENR.IS , whose shares fell 5.4 percent, issued a 
statement linking the price move to an "irresponsible 
commentary" on a website which it said had nothing to do with 
the firm. 
    Aksa Enerji  AKSEN.IS  also denied that the website story 
was referring to it. Its shares dropped 3.8 percent, while Zorlu 
Enerji  ZOREN.IS  was 3.7 percent lower. 
    "Akenerji and Aksa Enerji shares fell in response to the 
news," said one analyst who declined to be identified. 
     The benchmark 10-year government bond yield 
 tTR120325TA=IS  rose to 9.3 percent from 9.16 percent on 
Wednesday. 
 
 (Editing by Hugh Lawson) 
 ((daren.butler@thomsonreuters.com; +90-212-350 7122; Reuters 
Messaging: daren.butler.thomsonreuters.com@reuters.net)) 
 
Keywords: MARKETS TURKEY/