ISTANBUL (Reuters) – Turkish markets fell yesterday as part of a global rush out of riskier assets, while shares in Turkish Airlines slid 3.3 percent after a strike vote by workers on Thursday. The lira fell more than 2 percent in volatile trade, but locals, who have built up large dollar holdings, used the opportunity to sell dollars, trimming lira losses, traders said. The lira closed at 1.3030 to the dollar, 1.8 percent down on the day but still 9 percent firmer than it ended last year. Global stocks skidded yesterday as concerns grew about the wider impact of problems in the US subprime mortgage market, while investors piled into safer bonds. Central banks globally have moved to pump additional funds into nervous markets. Turkish markets are vulnerable to shifts in risk appetite as the lira’s strength comes in large part from its ability to lure investors with some of the highest interest rates in emerging markets. A large current account deficit also makes Turkish assets volatile when the global mood changes. «I don’t think the markets are out of the woods, I do think there’s room for more unwinding of carry trades and in that context… I’d say there’s more stress on the way (for the lira),» said Tolga Ediz, emerging market strategist at Lehman Brothers. But analysts say locals’ large foreign currency holdings and their willingness to switch back into lira, along with benchmark borrowing rates of 17.50 percent, are cushioning the lira. «The retail customers see this as a (dollar) selling opportunity,» said Inan Demir, economist at Finansbank. The main Istanbul stock index fell 1.6 percent to 49,186.43 points, adding to a 4 percent loss on Thursday and taking prices back to levels not seen since early July. But while European stocks lost all their 2007 gains, Turkey’s index was still 26 percent above its end-2006 level. Turkish Airlines fell 3.3 percent to 8.85 lira after its workers voted on Thursday to go on strike. The union which called the vote can call a strike within six days so a strike could still be avoided or postponed. «At this stage we expect that the final strike decision might not be taken. However, the additional labor cost burden might reach $80-100 million if both sides compromise on their demands,» Oyak Securities said in a daily note. «As a result we continue to review our earnings estimates for a possible cut, taking the possible additional labor cost burden,» it said. Lira bonds also weakened, with the yield on the May 6, 2009 benchmark bond rising to 17.70 percent from a previous 17.33. In Monday-dated trade it rose to 17.79 percent. Political uncertainty ahead of a crucial presidential election adds to Turkey’s risk profile and investors are waiting to see who the newly re-elected Justice and Development Party will put forward as presidential candidate. Any decision to renominate Foreign Minister Abdullah Gul, who has an Islamist past, could stoke tensions with Turkey’s secularist military.