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Turkey Stocks Gain as Iraq Oil-Supply Concern Eases; Lira Falls

June 17 (Bloomberg) -- Turkish stocks rose for the first time in three days as concern eased that violence in Iraq will disrupt oil supply. The lira reversed gains as U.S. inflation data spurred bets the Federal Reserve will raise interest rates.

The Borsa Istanbul 100 Index gained 0.7 percent at 5:03 p.m. in Istanbul following a 2.7 percent retreat in the previous two days. The currency weakened 0.2 percent to 2.1476 per dollar, reversing an advance of as much as 0.6 percent after data showed the cost of living in the U.S. rose more than forecast in May. The yield on Turkey’s two-year notes climbed 13 basis point to 8.6 percent.

Violence in Iraq hasn’t hurt crude output, the International Energy Agency said today, helping send Brent crude down for a second day. Turkish stocks lost 1.7 percent last week, the most since the five days through April 25, as the Islamic State in Iraq and the Levant captured Mosul, spurring concern Iraq’s oil supplies may get disrupted.

The market has priced in “enough” for the risks from a worsening of turmoil in Iraq, Bugra Bilgi, a hedge fund manager at Garanti Asset Management in Istanbul, wrote in e-mailed comments before the U.S. inflation data. Investors are “buying emerging markets and selling oil,” he said.

Prime Minister Nouri al-Maliki’s Shiite Muslim-led government is seeking to reassert control over territory held by ISIL, a breakaway al-Qaeda group. West Texas Intermediate declined 0.2 percent today amid speculation that gains to a nine-month high last week were excessive.

Turkey is a net oil importer with the biggest current-account deficit as a percentage of economic output among 11 emerging nations in developing Europe and Africa monitored by Bloomberg.

The Fed, which starts a two-day meeting today, will probably raise its benchmark interest rate faster than money-market investors expect, based on a Bloomberg News survey of economists.

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

To contact the editors responsible for this story: Samuel Potter at spotter33@bloomberg.net Daliah Merzaban, Ash Kumar

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