ECONOMY

Turkish markets extend slide as worries mount over Iraq, Cyprus

ISTANBUL – Turkey’s lira, stocks and debt extended the week’s heavy falls yesterday amid nerves over a looming war in neighboring Iraq and faltering efforts to unite Cyprus, seen as key to Ankara’s European Union ambitions. (The markets closed before president Ahmet Necdet Sezer announced he was vetoing a law that would lift the ban on Recep Tayyip Erdogan, leader of the victorious party in recent elections, running for political office.) The lira weakened to 1,632,000 to the dollar from Wednesday’s 1,597,000, its lowest close since November 13 and sharply off recent highs at some 1,510,000 to the dollar reached in early December. Stocks slid 3.83 percent to 11,125.28 points led by large banks and holding companies, while benchmark December 3, 2004, debt fell to 55.24 percent from Wednesday’s 53.88. The paper was at yields of 56.54 percent in Friday dated trade. «Foreigners appear to be selling and closing their (bond) positions for the New Year,» said Volkan Kurt at ABN Amro, pointing to concern over the Iraq issue. Investors fear conflict next door in Iraq may reverse Turkey’s economic growth, which is returning this year after a devastating financial crisis shrank the economy by over 9 percent in 2001. Prolonged disagreement over a UN plan to reunite Cyprus is worrying foreign investors looking for further warming in Ankara’s relations with Brussels after last week’s EU summit in Copenhagen offered accession talks if Turkey passed a December 2004 review.