On a more positive note data showed the jobless rate fell in May to a 10-year low, reflecting job growth in the services sector and seasonal effects.
Istanbul's main share index was down 0.21 percent at 64,024 points, in line with a 0.4 percent fall in the MSCI emerging markets index.
By 0801 GMT, Turkey's two-year benchmark bond yield stood at 8.10 percent, up from a previous close at 7.98 percent. Bond yields rose 10 basis points on Tuesday when low demand at an auction meant the Treasury narrowly failed to reach its August borrowing target of 16 billion lira ($8.87 billion).
"The rise in oil prices and geopolitical risks spoiled the rally in the bond market. We will see 8 percent in intraday trade, which is an important support level," analysts at Halk Invest said in a note.
The 17-month uprising in neighbouring Syria is weighing on Turkish financial markets on worries Turkey could be adversely affected by sectarian strife or become embroiled in the conflict.
The benchmark bond yield fell as low as 7.47 percent earlier this month as falling inflation and a narrowing current account gap boosted demand from investors. Some traders said the rise in bond yields was partly due to profit taking following the rally.
However, a rise in the oil price in recent days to its highest since May poses risks for the inflation outlook and current account deficit and is putting pressure on the lira.
The currency was slightly weaker against the dollar at 1.8047, compared with 1.8020 late on Tuesday. Against its euro-dollar basket, it stood at 2.0136, from 2.0114, the weakest since July 30.
"The rise in oil prices above $114 a barrel would negatively affect the Turkish economy through the current account gap and inflation channels. The lira's weakening compared with the Russian rouble also confirms this," said Fatih Keresteci, strategist at HSBC. The rouble benefits from a rising oil price as oil is Russia's chief export.
"Rising geopolitical tensions also have started to negatively affect Turkish assets. Turkish companies' dollar-buying weakens the lira too," Keresteci said,
Local companies buy dollars to pay their import bills. As Turkey imports 95 percent of its energy needs, any rise in oil prices damages its huge current account gap which rose to 10 percent of its gross domestic product in 2011.
Despite the slowdown in the Turkish economy, the unemployment rate fell to 8.2 percent in April to June period, the Turkish Statistics Institute said on Wednesday.
Finance Minister Mehmet Simsek said in emailed comments to Reuters this was the lowest figure in 10 years, and the seasonally adjusted rate of 9 percent is the lowest since 2005.
"Seasonal affects are usually strong in Turkey during the summer due to employment in construction, tourism etc. We don't think the unemployment rate will fall further as the economy slows down. As this data is several months old, it wouldn't have any effect on the central bank's policy decision," said Emre Tekmen, economist at TEB.
Investors were also awaiting a central bank policy meeting on Thursday. The bank is expected to gently ease monetary policy to support the slowing economy by raising the portion of lira reserves that banks can hold in foreign currencies. But it is expected to keep its policy rate at a record low 5.75 percent.