Turkish markets hopeful over EU

Turkey’s political leaders expressed disappointment yesterday after the EU declined to grant a firm date for Turkish entry talks but markets and business reacted with calm and even a glimmer of optimism. Markets held steady, shored up by foreign buying. Stocks ended only a shade down, and the lira even firmed despite the early angry government reaction to EU leaders’ offer of an entry talks date to be agreed only after a successful progress review set for December 2004. Turkey had been demanding a firm date for talks in 2003. Marco Annunziata at Deutsche Bank in London said the final outcome, for all the high emotion at an EU summit in Copenhagen, was very much in line with what markets had expected. «The initial reaction from the politicians was angry and disappointed,» he said, referring to remarks by Prime Minister Abdullah Gul who described the offer as unacceptable and spoke of an «act of prejudice» against Turkey. «But then they went on to underline two important things,» Annunziata said. «Firstly, that they had a timetable for accession and secondly that they would move on even faster with political and economic reform.» Markets and the business community, always wary of political uncertainty, would have been further reassured when Parliament passed a constitutional amendment that will effectively lift a political ban on Tayyip Erdogan, head of the Justice and Development Party (AK) that swept to victory at November polls. Stocks ended the day just 0.76 percent down after falling 4 percent in opening trade. The lira firmed to close at 1,545,000 on foreign buying, from a Thursday level of 1,555,000. «Whatever the decision at Copenhagen, we will still be facing westward,» Deputy Prime Minister Abdullatif Sener said. Economy Minister Ali Babacan said Turkey would carry through its economic reforms, backed by a $16 billion IMF package, whatever the final outcome in Copenhagen. Markets in Turkey have risen sharply since the AK party was elected. «As long as reforms go on, the EU decision cannot damage our economy,» he said.

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