ISTANBUL: The Turkish lira weakened against the dollar on Tuesday as a bounce in oil to above $70 a barrel halted the currency's week-long rally, while Istanbul stocks fell on profit-taking after last week's rise.
Turkish assets have benefited from oil's fall of almost 30 percent since June. Turkey imports almost all of its energy, a key contributing factor to its biggest economic weakness, a large current account deficit.
The lira slipped to 2.2250 against the dollar from 2.2230 late on Monday.
Russia and Turkey agreed to boost economic relations on Monday during a visit to Ankara by Russian President Vladimir Putin. He said he was offering Turkey a 6 percent discount on Russian gas, which will cut Turkey's energy bill by an estimated $500 million in 2015.
"Along with the ongoing weakness in oil prices, the 6 percent trim to Russian gas brings another relief to Turkey's energy bill and current account deficit," brokerage DenizInvest said in a research note. "Hence, the news can be deemed as a positive development for the overall market."
Turkey is seeking a deeper cut than Russia's proposed 6 percent discount, and negotiations are continuing after Ankara submitted a counter bid, Turkish Energy Minister Taner Yildiz said on Tuesday.
Since Russia is Turkey's key gas supplier, accounting for almost 50 percent of gas imports, the 6 percent cut in its sale price to Turkey is likely to raise expectations of a downward revision in natural gas tariffs at the beginning of the year.
That helped glass and electricity producers rally on the Istanbul stock exchange on Tuesday.
Among shares trading higher, petrochemicals maker Petkim was 1.31 percent up at 3.88 lira, while glass maker Anadolu Cam shares were up 0.52 percent.
Turkey's main stock index was down 1.39 percent however, as profit taking on bank shares weighed.
The benchmark 10-year government bond yield rose to 7.81 percent from Monday's spot close of 7.67 percent.
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