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Turkish shares and currency steady, Halkbank edges higher

* Turkish assets flat after sell-off on Syria tensions

* Shares in Halkbank firm on public offering news

* Dogan shares eyed ahead of parliament testimony

By Seltem Iyigun

ISTANBUL, Oct 5 (Reuters) - Turkish shares and currency steadied on Friday, a day after hitting their lowest levels in recent weeks due to tensions with Syria, while state lender Halkbank shares edged up on news a public offering would be completed within a year.

By 0748 GMT, the lira stood at 1.7980 against the dollar , a touch firmer than 1.7985 late on Thursday.

It had hit 1.8110 on Thursday, its weakest since mid-September, after Turkish artillery hit targets near the Syrian border in retaliation for Syrian shelling which killed five Turkish civilians on Wednesday.

Investors' anxiety declined after Turkey said Syria had apologised for the strike and such an incident would not be repeated.

"Since June, the lira has traded in a narrow band (against the dollar). Due to central bank policies which reduce volatility, we expect the lira to continue to move between 1.7850 and 1.83," said Isik Okte, strategist at Halk Invest.

The central bank uses its interest rate corridor - the gap between its overnight borrowing and lending rates - and the one-week lira repo auctions that it holds on a daily basis as tools to prevent extreme volatility in the lira.

At its August policy meeting it also introduced a new policy tool - reserve option coefficients - expected to play a growing role in its strategy to manage lira volatility in the face of an expected rise in foreign capital inflows.

Against its euro-dollar basket , the lira was flat 2.0676. Following the incident with Syria, it hit its weakest since Sept. 18 of 2.0759 on Thursday.

The main share index was up 0.46 percent at 67,207 points, in line with a rise of 0.26 percent in the emerging markets index .

Shares in Halkbank rose 0.36 percent to 14.1 lira, after Turkey's Privatisation Administration said late on Thursday that a secondary public offering (SPO) for a 20.8 percent stake in state-owned lender Halkbank would be completed in one year.

"This was expected. Although the statement mentioned a period of one year, we think this is a process that can be achieved in three months," said Ayse Colak, research director at Tera Securities.

Colak also said shares in Turkish conglomerate Dogan Holding

and its media group Dogan Yayin Holding would be monitored as media group bosses testify on Friday to a parliamentary commission investigating military coups.

The yield on the two-year benchmark bond stood at 7.60 percent, virtually unchanged from a previous close of 7.61 percent. It jumped as high as 7.75 percent on Thursday.

(Writing by Seltem Iyigun; Editing by Robin Pomeroy)

((seltem.iyigun@thomsonreuters.com)(+90 212 350 70 62)(Reuters Messaging: seltem.iyigun.thomsonreuters.com@reuters.net))

Keywords: MARKETS TURKEY/