UPDATE 1-Turkish bonds and stocks rise, Dogan Yayin dives

ISTANBUL, Nov 10 (Reuters) - Turkish bonds and stocks gained on Tuesday but shares of the country's biggest media group, Dogan Yayin, dived after it denied a report that Germany's Axel Springer was buying five of its papers. Dogan Yayin fell 2.92 percent to 1.33 lira, after a source in Dogan Yayin Holding rejected media reports that Dogan was selling some of its newspapers.

Axel Springer also rejected the media report. Dogan Yayin said last month it was seeking new partners or the sale of stakes in subsidiaries in the face of a record 4.8 billion lira tax fine, which exceeds the stock market value of its companies. Nonetheless shares in media mogul Aydin Dogan-owned Dogan Gazetecilik rose 2.94 percent. The main stock exchange index was up 0.35 percent at 47,941 at 1342 GMT, outperforming the MSCI index of emerging markets which inched higher 0.29 percent. Shares in Garanti Bank were up 1.75 percent at 5.80 lira following third quarter earnings that showed net profit of 666.7 million lira for the July-September period. "Net interest income remained stable quarter on quarter, being a major factor contributing to the total revenue base. Also higher other non-interest income... and incrementally lower operating costs all helped the third quarter 2009 bottom line," said Is Invest in a note. The lira closed unchanged at 1.4730 against the dollar. The yield on the Aug. 3, 2011 benchmark bond fell to 8.60 percent from the previous day's close of 8.65 percent. Yields had fallen to below 8 percent on expectations of further, though more moderate, rate cuts. However fears over high state borrowing have since curbed investor appetite. "The (Turkey) story has not changed much. It is obvious that room for rate cuts is limited but what matters is when the rates will start increasing and this does not look likely for one year at least," said one fund manager, who declined to be named. The Turkish Central Bank cut its benchmark interest rate to a record low last month of 6.75 percent. "The Central Bank will try to keep real interest rates low as long as possible and postpone interest rate hikes," said the same fund manager. Turkey's largest construction company Enka Insaat's climbed 2.54 percent after its third-quarter net profit jumped 166 percent to 266.8 million lira. (Reporting by Thomas Grove and Selcuk Gokoluk; Editing by Andy Bruce) Keywords: MARKETS TURKEY/ ([e-mail]; [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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