By Selcuk Gokoluk
ANKARA, July 30 (Reuters) - Turkish stocks closed lower on Friday hit by sales of bank stocks after the publishing of earnings by some sector players, and booking profits on three consecutive days of gains.
The main stock exchange index fell 1.43 percent to 59,866.75 points, but is still up by around 9 percent this month. The MSCI global equities index dropped 0.85 percent.
Banking stocks fell 2.56 percent, with state-run Halkbank down 3.17 percent after it posted a forecast-beating second-quarter net profit of 519.8 million lira ($344.2 million) on Thursday.
'(Investors) are especially selling bank stocks and pulling down the index. The index may fall to 59,000-59,500 levels,' said a fund manager with one Turkish institution.
Analysts, however, said the market remains on a positive trend and has largely ignored escalating political tensions ahead of a Sept. 12 referendum on a constitutional reform package.
The lira ended at 1.5090, almost unchanged from the previous day's 1.51 against the dollar. The benchmark April 25, 2012 benchmark bond climbed to 8.32 percent from the previous day's 8.25 percent.
Foreign bank reports suggested betting on rising yields and players said Thursday's central bank move to raise reserve requirements for foreign exchange deposits by 0.5 percentage points also lifted bond yields.
'The benchmark April 25 2012 bond had fallen as low as 8.15 percent after starting trading 8.50 percent. Now it is back to 8.30 percent and this can be seen as booking profits,' said the same fund manager.
Citi economists said in a note that the central bank's move hints that the bank was becoming increasingly uncomfortable about the appreciation of the lira and the rapid widening of the trade deficit, which perked up 95 percent in the first half.
Official data showed on Thursday that trade deficit moved 35 percent up in June to $5.62 billion.
'We believe that the rising pressures to contain the appreciation of the lira will eventually lead the bank to raise the size of its daily forex purchase auctions (currently up to $60 million of which $30 million is optional),' Citi said.
Thursday's March 2021 Eurobond tap bolstered sentiment in the bond market.
The Turkish Treasury sold $1 billion worth of March 2021 Eurobonds on Thursday in a tap that was five times oversubscribed and exceeded its 2010 target for Eurobond borrowing.
'Once again the Turkish Treasury got this deal away with impeccable timing - this time almost to the hour, given the broader global market weakening later yesterday,' the Royal Bank of Scotland analyst Timothy Ash said in a note.
The Treasury said Eurobond issues in 2010 reached a total of $6 billion with Thursday's tap.
(Editing by Patrick Graham) Keywords: MARKETS TURKEY/
(selcuk.gokoluk@reuters.com; +90 312 292 7012; Reuters Messaging: selcuk.gokoluk.reuters.com@reuters.net)
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