Turkish stocks, the lira and bonds reversed some of their earlier losses on Friday as oil prices receded after Libya announced a cease-fire and said that it would halt all military action against the rebels. By 1536 GMT the yield on the November 7, 2012 benchmark bond fell to 8.75 percent after rising as high as 8.8 percent earlier today.
The lira firmed to 1.5792 per dollar, having traded as weak as 1.5880 earlier. The Istanbul Stock Exchange benchmark index closed 0.6 percent higher at 63,839.27, slightly underperforming the emerging benchmark which rose 0.8 percent. Libya declared a cease-fire in the country to protect civilians and comply with a United Nations resolution passed overnight, Libyan Foreign Minister Moussa Koussa said, which erased earlier losses for Turkish assets, according to traders. ICE Brent May crude fell $1.02 to $113.88 a barrel by 1247 GMT, trading from $113.07 to $117.29.
"Everyone was watching the oil price. Now with this latest declaration, oil price has dropped, decreasing supply disruption fears," said one trader. Turkey is vulnerable to higher oil prices as imports cover 95 percent of its oil and gas needs. Adding to concerns, Turkish contractors have large projects in Libya.
Otherwise, global market sentiment was helped by concerted central bank intervention to curb sharp rises in the yen. Japanese shares jumped and the yen tumbled on Friday after the Group of Seven rich nations agreed on rare joint intervention aimed at calming markets jittery over the nuclear crisis in Japan.
"We are observing optimism on financial markets caused by the intervention of Group of Seven countries," said Fatih Keresteci, a strategist at HSBC Bank. The Turkish market is shifting its focus to the central bank's monthly monetary committee meeting next Wednesday.