Turkish assets firm, Dogan hit by deal talk failure

* Turkish assets rise

* Dogan Yayin falls 7.5 pct, Dogan Holding down 7.8 pct

ISTANBUL, Nov 25 - Turkish assets edged higher on Wednesday but investors punished media giant Dogan Yayin for failure to reach a tax fine settlement with authorities.

Dogan Yayin <DYHOL.IS> said talks with tax authorities over a record 4.8 billion lira tax fine failed to bring a settlement, sending shares in the country's largest media firm down 7.46 percent to 1.24 lira. [nGEE5AO0AS]

Shares in Dogan Holding <DOHOL.IS> were down 7.8 percent at 0.94 lira.

The broader Istanbul stock market <.XU100> was trading 0.4 percent higher at 45,696 after slight losses on Tuesday and in-line with gains of 0.44 percent on the MSCI index of emerging markets <.MSCIEF>.

Top-traded Garanti Bank <GARAN.IS> was trading up 0.94 percent at 5.35 lira, while mining firm Koza Madencilik <KOZAA.IS> was up 0.82 percent at 4.92 lira on expectations that an initial public offering for its gold unit was nearing.

Shares are up some 70 percent since the start of 2009, but have fallen almost 11 percent in the last month, in part on political tension between the ruling Islamist-rooted AK Party and the secular judiciary over illegal wiretapping allegations.

Investors are particularly sensitive to such discord as economic recovery in Turkey has failed to materialise at the pace some had hoped.

The lira <IYIX=> was trading at 1.4910 against the dollar on the interbank market from the previous day's close of 1.4950. The yield on the Aug. 3, 2011, benchmark bond <0#TRTSYSUM=IS> fell slightly to 8.83 percent from the previous day's close of 8.85 percent.

The benchmark bond yield had dropped as low as 7.59 percent in October, but has since risen on expectations the central bank's steep rate-cutting cycle is coming to an end.

Dogan Yayin said it would continue its legal challenge against the tax fine, which could cripple the company and has attracted the attention of the European Union, which Turkey aims to join.

"The legal process can take a long time, even years. This means the uncertainty surrounding the issue will continue and be reflected in the stock performance," said analyst Onder Zorba at Ata Invest.

He also said that the failure to settle could negatively impact plans by German publisher Axel Springer AG <SPRGn.DE> to buy a 29 percent stake in the firm. ((thomas.grove@reuters.com; Telephone: +90 212 350 7051; Reuters Messaging: thomas.grove.reuters.com@reuters.net))