ISTANBUL (Reuters) – The Turkish lira and debt edged up, but stocks fell yesterday as nervousness remained high about a looming war in neighboring Iraq that Ankara fears could damage its crisis-hit economy. The lira and debt had fallen sharply over the past two weeks as Washington appeared to be moving ever closer to war against Iraq over its alleged weapons of mass destruction. The lira strengthened to close at best bids of 1,648,000 to the dollar from Wednesday’s 1,652,000 and yields on December 3, 2003, debt fell to 55.56 percent from Wednesday’s 57.27 percent. But the main stock index ended down 4.47 percent at 10,396.74 points, after a strong opening and a 4-percent rise on Wednesday. «There’s a lot of uncertainty. An Iraq operation seems to be certain. There’s speculation about the extent of Turkey’s participation in the operation,» said Ibrahim Haseski of Garanti Portfolio in Istanbul. Traders said they were keeping a close eye on Ankara, where Prime Minister Abdullah Gul met with military brass and Foreign Ministry officials yesterday to discuss what role Turkey would play if Washington decides to attack Iraq. The USA is expected to offer financial aid for Turkey to mitigate economic damage from any war. On the stock market, shares in Yapi Kredi, one of Turkey’s top four private banks, initially jumped 7.55 percent but ended flat after news it had applied to join a World Bank-backed program to restructure debt owed to it by its major shareholder Cukurova Group and other group firms. «The market opened higher because of the Yapi Kredi announcement but with all the headlines in the newspapers, the focus turned to the likely war in Iraq,» said Huseyin Istanbullu of Prestij Securities. The Treasury sold $606.8 million of 383-day dollar-denominated domestic debt at an auction at a yield of 6.47 percent. The Treasury sold $125 million of the paper in non-competitive sales before the main auction. The Treasury, which is working to manage a debt load swollen by last year’s financial crisis, has regularly turned to foreign currency-denominated debt sales for longer-term paper and to avoid paying higher interest on lira debt.