Turkish bonds little changed; stocks up

Turkish bonds and the lira were little changed on Friday despite data showing a higher than expected current account deficit for December, with markets holding their bets until next week's central bank rate meeting. Turkey's current account deficit widened 132 percent to $7.5 billion in December, central bank data showed on Friday, clouding the otherwise bright economic outlook. A Reuters poll had forecast a $7.O billion deficit.
For all of 2010 the deficit, an economic weak spot for Turkey in times of expansion and a growing concern for policymakers, widened 247 percent to a record $48.6 billion, in line with forecasts. Turkish bond prices were little changed on Friday after firming on Thursday following a week-long slide, with the market awaiting a central bank policy meeting next week. Most analysts expect the bank to leave interest rates unchanged after cuts in the past two months.
"The risk of rising inflation, possible interest rate hikes and uncertainty over their size as well as the upcoming elections may lead to surprise moves in bond yields. But today it seems we are stuck around 8.50," a bond trader said. The yield on the benchmark November 7, 2012 bond closed at 8.45 percent, slightly lower than Thursday's close at 8.49 percent, halting a spike in yields from below 8 percent last week to as high as 8.70 percent in Wednesday trade.
Istanbul's main share index closed up 0.48 percent at 64,730 points after closing 1.8 percent lower on Thursday. It had traded flat most of the day but was helped by US data in-line with expectations. The banking index, which lost 1 percent on Thursday after the banking association head said lenders' profits would fall 10 percent in 2011, was up 0.37 percent on Friday, supported bby strong results at Halkbank Shares of state-controlled Halkbank rose 0.8 percent to 12.45 lira, after it posted 2010 net profit up 23 percent.
Akbank, Turkey's largest lender by market value, posted a slight fall in fourth-quarter net profit to 690 million lira. Its shares closed down 0.25 percent to 7.84 lira. Turkish shares have weakened slightly since the start of 2011 after rallying 27 percent last year as Turkey's stellar economic growth drew in investors.