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Turkish assets up as trade data raises hopes for credit rating

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ISTANBUL, Oct 11 (Reuters) - Turkish shares jumped to theirhighest level since May 2011 and the lira firmed on Thursdayafter data showing a lower-than-expected current accountdeficit.

The data strengthened hopes that credit rating agenciescould upgrade soon upgrade Turkey's rating.

Turkey's August current account deficit fell to $1.18billion, its lowest level since October 2009, central bank datashowed, and was smaller than a Reuters poll forecast for adeficit of $1.750 billion.

Late in August, Fitch said it might raise Turkey's long-termrating to investment grade if it makes progress towards itspotential growth rate, trims inflation to its target rate andnarrows the current account gap to a more sustainable level.

Currently, Fitch rates Turkey's creditworthiness at BB+ witha stable outlook, one notch below investment grade. The agencysaid on Wednesday it will be looking at Turkey's credit ratingquite soon.

By 1453 GMT the lira had firmed to 1.8092 against the dollar, from 1.8165 late on Wednesday.

Turkey's main share index closed up 1.64 percent at69,577 points, its highest level since May 2011, outperforming a0.45 percent rise in the emerging markets index .

The rally was led by banking shares which closed 2.96percent up on Thursday.

Analysts said bank shares were also gaining on theexpectation that the central bank will loosen its policy stanceas the trade data indicated a slowdown in the economy. An easiermonetary policy would lower the banks' borrowing costs.

The yield on Turkey's two-year benchmark bond

closed at 7.59 percent from a Wednesday's closeat 7.63 percent.

Turkey's central bank cut the upper end of the interest ratecorridor by 150 basis points to 10 percent for the first time inseven months in September.

(Writing by Seltem Iyigun; Editing by Elaine Hardcastle)

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

Keywords: MARKETS TURKEY/CLOSE

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