UPDATE 1-Turkish lira eases as industrial output falls

* Lira slightly eases after industrial production

* Bonds yields inch down, shares flat

* Aug industrial output falls 1.5 pct y/y; below f'cast

* Markets unmoved by medium-term programme

(Adds quotes, details) By Seltem Iyigun

ISTANBUL, Oct 9 (Reuters) - The Turkish lira eased slightlyand bond yields inched down on Tuesday as a surprise fall inAugust industrial output and a cut in official growth forecastssuggested the central bank will keep monetary policy loose forlonger.

Turkish industrial production fell 1.5 percent year-on-yearin August, data from the Turkish Statistics Institute showed onTuesday, confounding a Reuters poll forecast for a rise of 2.5percent.

Turkey's government also revised down its growth forecastsfor this year and next but stuck to its prediction that theeconomy would expand by 5 percent in 2014.

By 0935 GMT, the lira had weakened to 1.8145 against thedollar , from 1.8115 late on Monday. Against itseuro-dollar basket , the lira was flat at 2.0808.

"The low industrial production data affected the liranegatively," said Erkin Isik, strategist at TEB. "The slowdownin growth supported expectations that the central bank wouldkeep its rates low for a long time."

The central bank cut the higher of the two interest rates ituses to control policy by 150 basis points to 10 percent inSeptember, the first cut in seven months, and hinted it could domore to support a slowing economy.

On Monday, the lira eased to 1.8168 against the dollar, itsweakest since due Sept. 6, due to heightened tensions with Syriaand a sell-off in emerging markets due to growth worries.

Geopolitical tensions between Syria and Turkey have risensince five Turkish civilians were killed in artillery shellingfrom Syria last week. Tuesday was the sixth consecutive day ofretaliatory strikes by Turkey on Syria.

The yield on Turkey's two-year benchmark bond

stood at 7.63 percent, slightly down fromMonday's close at 7.68 percent.

Announcing the government's medium-term programme for2012-2015 on Tuesday, Deputy Prime Minister Ali Babacan said theeconomy was expected to grow 3.2 percent this year, below itsforecast of 4 percent made a year ago.

The government also cut the forecast for next year's growthto 4 percent from 5 percent but said the current accountdeficit, a key weakness of the economy, would gradually decline.

Markets did not immediately react to the revision.

The International Monetary Fund said on Monday that Turkeyis on track to return to its long-term growth path after a softlanding this year but warned that its wide current accountdeficit leaves it vulnerable to volatile foreign capital flows.

Turkey's main share index was up 0.01 percent67,442 points, in line with a 0.12 percent rise in the emergingmarkets index .

(Writing by Seltem Iyigun; Editing by Catherine Evans)

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