Lira Falls to Three-Week Low on Syrian Violence, Spain’s Bailout

The lira weakened to the lowest level in almost three weeks and bonds dropped after violence in Syria spilled across its borders into Turkey and Lebanon and as Spanish Economy Minister Luis de Guindos declined to rule out a bailout.

The Turkish currency depreciated 0.6 percent to 1.8107 at 5:06 p.m. in Istanbul, the lowest level since March 23. The yield on two-year benchmark debt climbed for a second day, up 13 basis points, or 0.13 percentage points, to 9.48 percent.

Syrian President Bashar al-Assad’s regime spurned today’s United Nations deadline for a cease-fire. Turkey is considering options, including a buffer zone, as it prepares for a possible influx of Syrian refugees who have already almost doubled in number in less than a month, Prime Minister Recep Tayyip Erdogan said. If Turkey acts against Syria, it will be because President Bashar al-Assad forced its hand, Erdogan said. Two Syrian civilians who sought refuge in Turkey were injured by gunfire from Syria yesterday.

“Syria and what is happening in the Middle East is a real factor and we face several unknowns if things go for worse and Turkey intervenes,” Suha Yaygin, deputy head of emerging markets at Toronto Dominion Bank in London, said in e-mailed comments.

Spain’s efforts to calm investors with an additional 10 billion euros ($13 billion) of budget cuts in education and health failed to stem concerns the nation may be the fourth euro member to need a bailout.

The yield on Spain’s 10-year benchmark bond surged almost 20 basis points to 5.94 percent today as Guindos declined to rule out a rescue for Spain and Bank of Spain Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need additional capital if the economy weakens more than expected.

European stocks tumbled to their lowest level in more than two months after a U.S. report showed employers in the world’s largest economy added fewer jobs in March than forecast. Turkey’s ISE National 100 Index fell 1.4 percent, down for a fifth day, the lowest level in almost a month.

To contact the reporter on this story: Selcuk Gokoluk in Istanbul at sgokoluk@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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