Shares were largely flat, and the lira hit its weakest level in three months against a euro-dollar basket on the prospect of an easier monetary policy.

The government plans to increase existing taxes and introduce new ones to create an additional 10 billion lira ($5.54 billion) in revenue, Zaman daily reported on Wednesday.

The new taxes will be on automotive products and tobacco, while the corporate tax exemption on real estate investment trusts (REIT) may be abolished, according to Zaman, seen as close to the government. It did not say how it obtained the information.

The REIT index fell 2.68 percent.

The yield on the two-year benchmark bond closed at 7.33 percent after hitting 7.18 percent in early trade on expectations of aggressive rate cuts by the central bank.

Investors expect the bank to trim its overnight lending rate, the upper level of the corridor which is currently at 11.5 percent, at its next policy meeting on Sept. 18.

The benchmark yield had a previous close at 7.23 percent.

Some traders also described sales as profit-taking, as yields have fallen around 60 basis points since late August, when Central Bank Governor Erdem Basci hinted the rate-cutting process could start sooner than expected.

The lira eased against the dollar to 1.8084, compared with 1.8008 late on Tuesday, on easier monetary policy outlook. Against its euro-dollar basket it was 2.0693, its weakest since early June, from 2.0570 on Tuesday.

Istanbul's main share index rose 0.12 percent to 68,184, underperforming a 0.49 percent rise in the MSCI emerging markets index.