ISTANBUL (Reuters) – Turkey’s lira firmed more than 2 percent on the day yesterday, helped by buoyant global markets and diplomatic efforts to prevent a cross-border military operation against separatist Kurdish militants in northern Iraq. The lira closed on the interbank market at 1.2115 to the dollar, 2.2 percent stronger on the day, having earlier firmed as far as 1.2100. The currency, which still stands some 17 percent firmer than it started the year, lost some 3 percent on Monday on concerns that Turkey would respond to a guerrilla attack on Sunday that killed 12 soldiers with an incursion into northern Iraq. Yesterday Iraq promised visiting Turkish Foreign Minister Ali Babacan that it would rein in Kurdistan Workers’ Party (PKK) militants, who use northern Iraq as a base from which to attack Turkey. Prime Minister Recep Tayyip Erdogan was also quoted as saying a joint operation with the United States could be carried out in northern Iraq, a prospect investors welcomed over a unilateral move which could threaten relations between the NATO allies. «I think that the markets are beginning to calm down a bit after Sunday’s sad news and now think the risk of a full-scale operation in northern Iraq has declined,» said Danske Bank economist Lars Christensen. «Furthermore, we are seeing some improvement in the global sentiment, so it’s a bit of both,» he said. «However, I think it is far too early to say that the risk regarding northern Iraq has gone.» Erdogan also said yesterday that Iraq should be aware that parliamentary approval obtained last week for an incursion into northern Iraq meant Ankara could send troops in at any time. Brushing off such comments, investors traded the main Istanbul stock index up 3.3 percent to 55,752.22 points, wiping out Monday’s losses. The yield on the August 5, 2009 benchmark bond fell to 16.12 percent from Monday’s 16.32 percent. In more positive news yesterday, data showed the number of foreign visitors to Turkey rose 23.5 percent year-on-year in September, signaling a continued recovery in the crucial foreign currency-earning tourist industry. «Despite the ongoing appreciation of the local currency we think that the recovery in the sector will limit the widening in the current account deficit in the coming period,» said Raymond James economist Ozgur Altug. Third-quarter tourist revenue data are due next week, and investors will watch this for further signs that spending is not growing as fast as visitor numbers. Meanwhile, the treasury said an IMF delegation would come to Turkey in the coming days to complete talks for the seventh review of the country’s $10 billion loan deal.