Monday July 6, 09:18 AM
Turkish markets soften after inflation data
ISTANBUL, July 6 (Reuters) - Turkish markets lost ground on Monday after data last week showed consumer prices rose higher than expected in June and dismal U.S. unemployment figures raised caution in global markets.
The yield on the benchmark Feb. 2, 2011, bond rose to 11.76 percent from Friday's 11.63 percent, but still near a two-month low.
'The benchmark bond yield fell 3.5 percent in the last one week. Our band forecast for the benchmark bond this week is 11.40-12.00 percent,' said Akbank in a research note.
Consumer prices rose 0.11 percent in June, higher than a Reuters forecast of unchanged level, but still backing expectations of an interest rate cut later this month.
The data showed that the CPI (NYSE: CPY - news) index posted a year-on-year rise of 5.73 percent, still well below end-2009 target of 7.5 percent.
The central bank said on Monday in its inflation report that decreasing energy prices would push down prices in the future, while the change in tax rates on various sectors such as automobiles and white goods will exert upward pressure on prices.
The lira softened 0.8 percent to 1.5435 from Friday's closing at 1.5310 against the dollar on the interbank market.
The lira has rallied 18 percent since its weakest this year in March, but has traded flat in the last month on uncertainties over the fate of a major loan deal with the International Monetary Fund.
'This looks to me a normalisation trend. Honestly, I did not understand last week's optimism rather than today's negativity. Global bourses' performance had not been good for the past few days and some bad data is added on this,' said Cengiz Kilic, corporate treasurer in Demir Life Insurance.
The main Istanbul share index fell 1.04 percent to 36,414.38, in line with the MSCI index of emerging market stocks that lost 1.16 percent.
Industrial output data, current account balance and capacity utilisation data will guide Turkish markets this week.
(Reporting by Selcuk Gokoluk, editing by Mike Peacock) Keywords: MARKETS TURKEY/
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