ISTANBUL, Nov 4 (Reuters) - Turkish markets strengthened on Tuesday on increased expectations of a loan accord with the International Monetary Fund and an interest rate cut from the European Central Bank.
The lira firmed 2.1 percent to 1.5110 compared with a close of 1.5435 on Monday. The yield on the benchmark June 23, 2010 bond fell to 22.22 percent from the previous day's 22.74 percent.
Traders attributed the markets' rise in the afternoon trade partly to growing expectations Turkey may sign a loan deal with the IMF.
The markets shrugged off Turkey's Statistics Institute data showed consumer prices rose 2.60 percent in October, with producer prices 0.57 percent higher in the month after lira losses in after-hours trade on Monday.
World stocks edged higher on Tuesday after Australia's big interest rate cut raised the view that European Central Bank and Britain might follow with an aggressive rate cuts.
The main Istanbul share index edged up 3.35 percent

28,924 points at 1246 GMT.
"Euro/dollar moves, and expectations of an interest rate cut from the ECB and money inflow into emerging markets supported us. But we are not sure this will be a lasting move as Turkey is still very open to volatility," said Finansbank's Basak Karaaslan.
A bond trader said foreign buyers are back in the bond market and because there is not much new offer in the market, even small purchases reduce the bond yields.
IMF officials were in Turkey last week as part of Turkey's post-programme monitoring process. Turkey is carrying out technical talks with the IMF on a pre-cautionary standby deal after its $10 billion stand-by loan ended in May.
Turkey's business community has been calling for another loan deal to help limit fallout from the current global economic crisis.

(Reporting by Selcuk Gokoluk; Editing by Victoria Main) (selcuk.gokoluk@reuters.com; Telephone: +90 312 292 7012; Reuters Messaging: selcuk.gokoluk.reuters.com@reuters.net)

COPYRIGHT

Copyright Thomson Reuters 2008. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.