Monday July 6, 05:03 PM
UPDATE 1-Turkish markets soften after inflation data
ISTANBUL, July 6 (Reuters) - Turkish markets lost ground on Monday after data showed on Friday that consumer prices rose higher than expected in June and dismal U.S. payroll data raised caution in the global markets.
The yield on the benchmark Feb. 2, 2011, bond rose to 11.79 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 higher white goods tax rates will spike July inflation, though it sees energy prices to post lower annualised inflation in the short term.
Last week's dismal U.S. payrolls report still contributes to the selling in the markets, traders said.
The lira softened to 1.5480 from Friday's closing at 1.5310 against the dollar on the interbank market.
The lira rallied 18 percent since its weakest this year in March, but has traded flat in the last one 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 0.11 percent to 36,758.82, outperforming the MSCI index of emerging market stocks that lost 2.19 percent.
The Treasury said it would hold two swap auction on July 9, with securities maturing on Oct 7, 2009 and Feb. 17, 2010 to be bought and paper with the maturity date of Sept 26, 2012 and Aril 2, 2014 would be issued.
Industrial output data, current account balance and capacity utilisation data will guide Turkish markets this week.
(Reporting by Selcuk Gokoluk; Editing by Victoria Main) Keywords: MARKETS TURKEY/
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