Turkey's Lira Drops With Stocks After Reports of Istanbul Blast

  • 10 people killed, 15 injured in explosion in Istanbul
  • Stocks fell as much as 1.2 percent following blast reports

Turkey’s stocks climbed the most in almost three weeks and the lira gained as investors played down a deadly suicide bombing in Istanbul as global markets stabilized and China sought to stem the yuan’s declines.

The Borsa Istanbul 100 Index climbed 1 percent, its biggest gain since Dec. 23. Koc Holding AS led the advance, climbing 3.1 percent. The lira gained 0.3 percent to 3.0321 per dollar at 5:58 p.m., after falling as much as 0.4 percent.

Ten people were killed and 15 injured in Tuesday’s blast in Istanbul’s Sultanahmet district, reigniting concern about the worsening security situation in the country’s $800 billion economy. Demand for riskier trades was buoyed after China earlier stepped up its defense of the yuan by buying the currency in Hong Kong.

“Markets are getting more used to rising geopolitical risk out of the region,” said Luis Costa, the head of fixed-income and currency strategy for central and eastern Europe, the Middle East and Africa at Citigroup Inc. in London. “And today has been the first day of generalized positive reaction -- so far -- from the recent stabilization in China. So, I guess the markets are taking the chance on the lira.”

Capital Inflows

Turkey depends on capital inflows to finance its current account deficit. Foreign investors sold more than $10 billion of Turkish stocks and government bonds over the last 12 months. The government’s 10-year bonds rose, driving yields down three basis points to 11.28 percent.

Sultanahmet is Istanbul’s main tourist area, the center of power in the Ottoman Empire and home to attractions including the Blue Mosque, Haghia Sophia, Grand Bazaar and Topkapi Palace. Twin bombs in the capital Ankara killed more than 100 people in October, an attack blamed on members of the Islamic State.

Suicide Bomber

The suicide bomber in Tuesday’s attack was a Saudi-born Syrian named Nabil Fadli, Turkey’s state-run TRT World reported, without saying how it got the information. Turkish Prime Minister Ahmet Davutoglu said the attacker was a foreign member of Islamic State. Turkey has been fighting the group, which occupies large swathes of territory in Iraq and Syria close to Turkey’s southeastern border.

Turkish troops stationed in Iraq this month killed 17 Islamic State militants as they tried to infiltrate Turkey’s Bashiqa camp near the Iraqi city of Mosul, which the group has controlled since June 2014. Turkey reinforced the base in December with more troops and tanks, saying it was part of its efforts to train Kurdish and Sunni Iraqi forces fighting Islamic State.

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