* Turkey, IMF ditch talks on stand-by loan deal
* Bond yields near 10 basis points higher on day
* Stocks decline slightly, lira firms slightly
(Updates with company dividends, emerging market stocks)
By Nevzat Devranoglu and Alexandra Hudson
ISTANBUL, March 10 (Reuters) - Turkish bond yields rose on Wednesday after Turkey and the International Monetary Fund said talks on a possible stand-by loan deal had been called off, but stocks saw only slim losses and the lira traded a little higher.
Economy Minister Ali Babacan told a conference Turkey was not discussing a loan with the international lender and did not need emergency funding, although he left the door open for a possible deal in the future, ending months of uncertainty in financial markets.
An IMF spokeswoman had said late on Tuesday loan talks had ended and a mission would visit Turkey in May to discuss economic and monetary policy.
The yield on Turkey's benchmark Nov. 16, 2011 bond rose to 9.26 percent on Wednesday, after closing at 9.17 percent the previous day, while the lira strengthened slightly to 1.5350 from a previous close of 1.5400.
Analysts said the market had already priced in the likelihood of no accord, after months of talks during which Ankara blew hot and cold over whether it would strike a deal.
"At the beginning of the year (the IMF deal) was a realistic expectation, but afterwards people started to believe it was no longer on the agenda. The market was already pricing in a no-deal situation," said trader Mehmet Ilgen at Ata Invest.
Having weathered the global financial crisis and tapped credit markets without difficulty, Turkey said earlier this year that a deal with the IMF was not essential.
Though the EU candidate country had no urgent need of funds, a loan agreement would have helped Turkey to reduce its debt-rollover ratios as well as creating a fiscal anchor, especially ahead of 2011 elections.
The absence of a stand-by loan will put added focus on state spending and a fiscal deficit which both ballooned in 2009.
"Although there may be some short-term reaction in equities, we see this as short-lived (the IMF will always be there if needed)," Simon Quijano-Evans of C.A. Cheuvreux said.
"In our view, the principal effect of a no-programme scenario is to place upside pressure on bond yields, which are already rising as inflation expectations rise," he added.
FISCAL DISCIPLINE
Turkish stocks were trading 0.44 percent lower at 52,725 at 1225 GMT while emerging markets were trading at a six-week high on improved risk sentiment. An MSCI Emerging Markets index was 0.56 percent higher at 1215 GMT.
Istanbul's top-traded stock Garanti was flat on the day at 6.35 lira.
Oil refiner Tupras, which said it tripled its net profit in 2009, said it was planning to pay a dividend of 2.14 lira per each 1 lira share. Shares were flat at 30.25 lira.
Last September, the government announced a medium-term economic programme aimed at reducing the budget deficit and boosting fiscal discipline.
Turkey's economy likely contracted 6.5 percent in 2009, analysts say, although it is seen posting growth of 3.5 percent in 2010 and the country was recently upgraded by all major credit ratings agencies. (Writing by Ibon Villelabeitia and Thomas Grove; Editing by Ron Askew)