ISTANBUL (Reuters) – Turkish shares closed 2 percent lower yesterday and the lira extended its losses after ratings agency Standard & Poor’s revised its outlook on Turkey to negative. The lira weakened further to 1.3090 against the dollar in Friday-dated trade, down 2 percent from the official close yesterday, after higher-than-expected inflation data. S&P said it had revised its Turkey outlook to negative from stable owing to the country’s increasingly fraught political and global environment in the near term and analysts said these developments could affect the interest rate outlook. «All this suggests limited scope for near-term rate cuts by the central bank. Indeed if the currency retains a negative bias, the monetary policy committee may be forced to hike rates,» said Bear Stearns economist Timothy Ash. Turkey’s main stock index, down less than 1 percent when the S&P announcement came, closed 2.01 percent lower at 40,160 points. It was also hit by data showing US jobless claims had jumped to their highest level since 2005. Lira losses were exacerbated by Turkish inflation data for March, released after shares closed, which showed consumer prices rose 0.96 percent month-on-month, above a 0.68 percent forecast for a year-on-year rise of 9.15 percent. Before the latest developments, the lira, down 11 percent from the end of last year, had been clawing back losses triggered by a chief prosecutor’s bid to close the ruling, pro-business Justice and Development Party (AKP) for suspected Islamist activities. The Constitutional Court this week agreed to look at the case and investors are watching to see how the AKP will respond to the court case. It could seek to change the constitution, risking further political tension. The AKP denies the charges, saying they are politically motivated. Although inflation has been running at about twice the Turkish central bank’s year-end target of 4 percent, the bank has cut rates six times since September before holding them steady at 15.25 percent at its March meeting.