Turkish assets make slim gains, borrowing weighs

ISTANBUL, Nov 6 - Turkish assets made modest gains on Friday and bond yields edged lower after rising as high as 9.0 percent, but lingering worries about high government borrowing kept the rise in check.

The main share index <.XU100> rose 0.78 percent to 47,666 after closing flat on Thursday. It underperformed the MSCI index of emerging markets <.MSCIEF>, up 0.94 percent.

Shares in Ram Lojistik, one of the few companies to hold an IPO during 2009 and which will be 25.19 percent publically owned, made their market debut on Friday but fell to their lower trading limit of 3.12 lira from a base price of 3.48 lira.

Among lead gainers was Turkish gold miner Koza Anadolu <KOZAA.IS>, up 8.5 percent at 4.32 lira, after it said according to a preliminary study its confirmed gold reserves were 8.1 million ounces at the end of September, up from confirmed reserves of 2.6 million ounces at the end of 2007.

Banking stocks <.XBANK> rose 0.62 percent.

"Current valuations are not overly cheap ... more like trading at fair value... Therefore we suggest investors use recoveries as a selling opportunity in general and focus on stock specific stories," analysts at Tera Securities said of the Turkish banks.

They have posted high profits throughout the year but face lower income and more difficult trading next year when the Central Bank's interest rate cuts come to an end.

The lira <IYIX=> firmed to 1.4820 to the dollar in interbank trade from a close of 1.4850 on Thursday. The currency has made only slim gains this year, and has slipped from a 2009 high of 1.4389 in mid-October. Stocks are up around 73 percent.

The yield on the benchmark Aug. 3, 2011 bond <0#TRTSYSUM=IS> traded at 8.81 percent from a previous close of 8.90 percent and having reached as high as 9.0 percent on Thursday after a debt swap auction, in which the Treasury sold less than expected.

Markets are worried about Turkey's foreign financing needs as expectations dim over the possibility of Ankara reaching a deal with the International Monetary Fund for a new loan deal to replace a $10 billion agreement that expired last year.

Higher October inflation also disappointed markets as consumer prices rose 2.41 percent month-on-month, exceeding a forecast of 1.80 percent, data showed on Tuesday. (Reporting by Alexandra Hudson and Thomas Grove; Editing by Ralph Boulton)