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Turkish assets are especially responsive to changing expectations about global liquidity tightening because its large current account deficit is financed by foreign capital inflows.
The lira weakened to 2.2032 against the dollar, its weakest since the end of May, settling at 2.1945 against the dollar by 1449 GMT from 2.1660 late on Monday.
Istanbul's main share index fell 2.58 percent to 80,080.22 points, compared with a 0.8 percent drop in the broader emerging markets index.
The benchmark 10-year government bond yield rose to 9.16 percent from 9 percent on Monday evening.