ISTANBUL, Jan 27 (Reuters) - The Turkish lira firmed on Tuesday on expectations the government would agree with the International Monetary Fund on a new loan accord, despite a temporary suspension of talks to resolve outstanding issues.
The lira
Turkey and the IMF will resume talks after suspending them late on Monday to resolve "disagreements on remaining issues," Economy Minister Mehmet Simsek told reporters.
The IMF said in a statement the two sides had made progress in key areas since beginning talks on Jan. 8 and would continue to seek an agreement on the outstanding issues, especially structural fiscal reform.
Turkey wants IMF funds to help it weather the global financial crisis as shrinking credit markets make it tough for the government and private-sector companies to finance large foreign-debt stocks.
"The market is in agreement that there will eventually be an agreement with the IMF," the head of forex and debt trading at an Istanbul bank said, on condition his name not be used.
"No one is pricing in the prospect of a deal not being reached, even if it was a little troubling that there was an official declaration that an agreement has been put off and that there are certain problems."
Yield on the benchmark Nov. 3, 2010 bond <0#TRTSYSUM=IS> on Monday fell to 15.08 percent from a 15.45 percent close on Friday. Trading was set to resume at 0730 GMT.
The main ISE National 100 share index <.XU100> closed 4.79 percent higher at 25,970 points, following a 4.2 percent fall last week. Turkish equities outperformed the MSCI index of emerging market shares <.MSCIEF>, which was up 1.5 percent on Monday.
"Despite worrisome rhetoric...we still think a deal with the Fund is imminent and it would be a mistake to sell equities in response to IMF-related news," analysts at Tera Securities in Istanbul wrote in a note. (Reporting by Nevzat Devranoglu and Ayla Jean Yackley; Editing by Clarence Fernandez)