Turkish assets slightly up, further gains in lira seen limited

ISTANBUL, Oct 12 (Reuters) - Hopes that Turkey's creditratings will be raised to investment grade buoyed local assetson Friday although a central bank warning that inflation is setto remain above target dampened some investor enthusiasm.

By 1441 GMT the lira had firmed to 1.8067 against the dollar, from 1.8092 late on Thursday. Against itseuro-dollar basket it stood at 2.0744, from2.0774.

Rating agency Fitch said on Wednesday that Turkey was makinggood progress in dealing with the financial crisis and that itwould soon look again at its rating, currently one notch belowinvestment grade at BB+ with a stable outlook.

Central bank governor Erdem Basci said on Friday the bankwould maintain its cautious stance regarding pricing behaviour,with inflation set to stay above its 5 percent target for sometime.

In a presentation made at the IMF-World Bank meetings inTokyo, Basci also reiterated that the fall in inflation wouldbecome more evident in the last quarter of the year.

Turkey's main share index closed up 0.04 percent at69,603 points, close to its highest since May 2011. The emergingmarkets index was 0.12 percent up.

The yield on Turkey's two-year benchmark bond

closed at 7.57 percent, virtually unchangedfrom Thursday's close at 7.59 percent.

(Writing by Seltem Iyigun; Editing by Catherine Evans)

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