* Central Bank expected to hold rates at 6.5 percent
* Turkish lira, stocks slightly weaker, bond yields lower
ISTANBUL, Dec 17 (Reuters) - Turkish assets were mixed on Thursday in subdued trading ahead of the central bank's rate-setting meeting which could see it end its mammoth easing cycle and hold rates for the first time in 14 months.
The central bank will announce its decision at 1700 GMT, with the majority of analysts in a Reuters poll expecting the bank to keep the benchmark overnight borrowing rate at 6.5 percent, 10.25 percentage points weaker than when it began easing in November 2008.
Having warned that recovery in Turkey will be slow and gradual, the bank must balance conflicting signals from the economy in making its decision.
Industrial output in October rose for the first time in 16 months, bucking expectations for another fall, and inflation in November rose more than expected.
Unemployment by contrast remains painfully high, with around one in four Turkish young people unemployed, and consumer confidence -- key to reviving Turkey's flagging domestic demand -- is on the decline.
The lira weakened to 1.5145 against the dollar on the interbank market from 1.5070 on Wednesday, while the yield on the benchmark Aug. 3, 2011 bond fell to 9.26 percent from a previous close of 9.32.
The yield hit a three-month high of 9.50 percent on Tuesday amid the political worries and doubts over Greece's fiscal position. An anticipated end to the central bank's easing cycle has also seen yields rise from lows of 7.56 in October.
"We anticipate the central bank will keep policy rates unchanged at 6.50 percent... Moreover, we attribute high likelihood for the bank to pause afterwards," said economist Ozlem Bayraktar at Unicorn capital.
"At its latest rate setting minutes (the bank) underlined that the future rate decisions would be conditional on economic data and developments. In fact, the November inflation figure and October's industrial production came in higher than expected, a signalling factor for the CBT to suspend rate cuts," she said.
Higher commodity prices would drive inflation pressure, however, she added, and the bank would resume tightening in the second-half of 2010.
The main share index was 0.12 percent weaker at 50,757.03 points in slightly choppy trade, after gaining a day earlier, outperforming the MSCI index of emerging market stocks which fell 0.84 percent. A climate of low interest rates in Turkey has helped drive stock market gains of some 88 percent since the start of 2009. (Reporting by Alexandra Hudson; Editing by Jon Loades-Carter)