UPDATE 1-Turkish assets gain, investors eye Garanti earnings

ISTANBUL, Nov 9 (Reuters) - Turkish assets were stronger on Monday as global optimism boosted Istanbul markets, offsetting weaker-than-forecast industrial output data. The yield on the Aug. 3, 2011 benchmark bond fell to 8.65 percent from Friday's close of 8.80 percent. The benchmark yield rose to 9.0 percent last week after the Treasury sold off less than expected of two papers at auction. The lira ended the day at 1.4730 against the dollar on the interbank market from a Friday close of 1.4820. Turkey's main stock exchange index rose 1.97 percent to 47,894 at 1402 GMT. "There is no local factor driving the market. 48,000 is an important resistance level and if the stock exchange index closes above this level, then 48,400 and 48,700 will become possible," said Cem Tozge, trader in Ata Investment Securities. Turkey's industrial production fell a steeper-than-expected 8.6 percent on the year in September, the Turkish Statistics Institute said on Monday, as weak domestic and export demand continued to take its toll. A Reuters poll had forecast a 7.1 percent year-on-year contraction, but economists said the fact the Muslim holy month of Ramadan fell in September had dampened output, and weaker data should not prevent an expected recovery in November and December. "The September outturn signals that the positive impact of tax incentives on durables are subsiding, while the other components failed to display a noticeable pick up," Citi economists said in a statement. "Looking ahead, in the absence of a meaningful pick-up in domestic demand, the recovery in the manufacture of capital goods is unlikely to be vigorous," City said. The banking index was 1.98 percent higher as top traded Garanti Bank announced results. The bank's stock rose 1.79 percent to 5.70 lira after it said its third-quarter net profit jumped 65 percent to 671 million lira. Moody's Investors Service has downgraded the long-term local currency debt and deposit ratings of 10 Turkish banks, while upgrading the stand-alone ratings of four institutions, the rating agency said in a statement on Monday. "The changes to the stand-alone ratings reflect the fact that Turkey's banks have proved relatively resilient thus far to the strains of the global recession and the resultant national economic downturn," it said. Isbank climbed 3.54 percent after Moody's upgraded the bank financial strength rating of it to C- from D+. (Reporting by Selcuk Gokoluk and Thomas Grove; Editing by Victoria Main) Keywords: MARKETS TURKEY/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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