ECONOMY

Turkish markets firm after surprise rate cut by central bank

ISTANBUL (Reuters) – Turkish markets firmed yesterday, with shares closing at a new high after the central bank cut key interest rates by one percentage point. The bank lowered the overnight borrowing rate to 17 percent from 18 percent and its overnight lending rate to 21 percent from 22 percent. It last cut the key rates on Dec. 20. The main share index rose 1.97 percent to 26,110.17 points. The index had touched a new intraday high of 26,181.12 during the session. Brokers said the share index was led by strong rises among banks and manufacturers of white goods. «Banks and the white goods sector are strong and we saw the movement trying to spread to the whole (share) market,» said Pamuk Investment’s Taner Ozarslan. Leading white goods producer Arcelik rose 4.82 percent and market heavyweight Is Bankasi (C) rose 3.95 percent. The banking index rose 2.87 percent. «Buying was spurred by news of a possible partnership between Sekerbank and Rabobank after the partnership of TEB and BNP. Investors expect foreigners’ interest in medium-sized banks will continue,» said Koc Investment’s Cenk Ozcelik. Sekerbank is conducting partnership negotiations with the Netherlands’ Rabobank. Turk Ekonomi Bankasi said in November that France’s BNP Paribas would buy a 50 percent stake in the bank’s holding company for $216.8 million. Analysts have indicated that banks would be one of the first sectors to lure foreign buyers as Turkey makes progress toward eventual European Union membership.