By 1532 GMT, the lira traded at 1.7911 versus the dollar, after weakening as far as 1.7927, compared with 1.7700 in late trade on Monday. "Today's sell-off is largely due to global risk aversion driven by euro zone debt concerns. Yet the lira's losses were limited compared with its peers," said Pinar Uslu, strategist at ING's affluent banking department. Many traders noted that lower than expected February inflation and a monthly central bank report that showed core inflation falling had raised the chances of further monetary easing. The lira has weakened around 1.5 percent versus the dollar since the bank eased its monetary stance at a meeting on Feb. 21. Data released on Monday showed the consumer price index rose 0.56 percent month-on-month in February, less than a Reuters poll forecast of a 0.60 percent rise, for a year-on-year rise of 10.43 percent. Against its euro-dollar basket the lira stood at 2.0710, compared with 2.0556 in late trade on Monday. The Turkish Treasury borrowed a combined 6.9 billion lira, including Monday's tap of a 10-year fixed-coupon bond. It raised 720 million lira from public institutions and 6.2 billion lira from primary dealers. Despite three successful auctions, bond yields jumped and the new benchmark bond yield closed at 9.39 percent, up from the close at 9.25 percent of the old benchmark bond. "Investors are concerned about a possible further liquidity tightening if the lira depreciates sharply. This would increase the funding costs of banks and reduce the demand for bonds," said Tufan Comert, strategist at Garanti Securities. Turkey's central bank has been running a complicated monetary policy that manages liquidity in the banking system on a flexible day to day basis, aiming to bring down its double-digit inflation while keeping the economy growing. Easier liquidity conditions since early January have allowed banks to buy more bonds thanks to lower funding costs. The main stock index closed 0.91 percent down at 59,143.43 points, outperforming a 2.25 percent fall in the MSCI emerging markets index