* C.bank tells investors inflation forecast to rise
* Benchmark yields, lira steady
* Banking shares rise By Seltem Iyigun
ISTANBUL, Oct 2 (Reuters) - Turkey's inflation-linked bond yields eased on Tuesday after the central bank said at a meeting with bankers that tax hikes would lead it to revise up its year-end inflation forecast.
Bankers who attended the meeting said they were told the tax increases would add 0.5 basis points to the central bank's year-end inflation forecast of 6.2 percent, although the bank said recent energy price hikes were already factored in.
"The central bank seems confident about inflation and gave no hint about a shift in the current monetary policy conduct," Ozlem Derici, senior economist at Ata Invest, said in a research note after the meeting.
The bank will announce its new year-end inflation forecast on Oct. 24 in its inflation report.
Turkey's state energy company, Botas, raised natural gas prices for consumers on Monday by 9.8 percent. Energy watchdog EPDK said electricity prices would also rise, for industry by 4 percent and for households by 9.8 percent.
The government also lifted the special consumption tax on most cars to 40 percent from 37 percent late in September and raised the tax on petrol and diesel, pushing up average prices by 8-8.9 percent.
Traders said the yield on Turkey's inflation-linked bonds, which investors prefer to buy to protect against higher future inflation, eased.
"Trading was thin. We saw some investors buying the linkers after today's central bank meeting," said one fixed income trader at a bank in Istanbul.
"The yield on the linker maturing on Feb. 23, 2022 fell to 2.26 percent from 2.33. They also bought the benchmark bond in light volumes," the trader said.
The yield on Turkey's two-year benchmark bond
closed at 7.54 percent, virtually unchanged from a previous close at 7.60 percent.
The main share index closed 1.11 percent up at 67,498 points, largely outperforming a rise of 0.2 percent in the MSCI emerging markets index .
The rally was driven by banking shares , which jumped 1.98 percent. Analysts said the fall in bond yields supported bank stocks.
By 1537 GMT, the lira was at 1.7906 against the dollar , slightly firmer than 1.7911 late on Monday. Against its euro-dollar basket it weakened to 2.0543 from 2.0517.
(Editing by Nick Tattersall)
Keywords: MARKETS TURKEY/CLOSE