ISTANBUL: Turkish bond prices fell on Thursday as investors locked in profits after sharp gains this week in the wake of successful debt auctions.
The yield on the two-year benchmark bond, which moves inversely to the price, closed at 5.97 percent, up from Wednesday's close at 5.89 percent. While solid demand at auctions had pushed up bond prices this week, inflation concerns continue to weigh on the market.
Inflation fell to 6.16 percent in December but the central bank said on Friday that an increase in the tax on cigarettes this month would add about 0.8 percentage points to January's inflation rate. "Inflation will rise in January due to higher tobacco prices," said Erkin Isik, strategist at TEB.
"Furthermore, expectations that the central bank will continue its monetary easing despite the recent economic recovery and loan growth have contributed to the steepening of the yield curve," he said.
Istanbul's main share index closed down 0.38 percent at 80,837 points, after earlier hitting a fresh record high of 81,505.03 points.
It underperformed a 0.34 percent rise in the global emerging markets index. The decline was led by banking shares which dipped 1.02 percent, analysts said.
By 1605 GMT, the lira had firmed to 1.7711 against the dollar, from 1.7774 late on Wednesday. Against its euro-dollar basket it eased to 2.0556 from 2.0477.
Center>Copyright Reuters, 2013
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