Turkish assets slightly up, further gains in lira seen limited

ISTANBUL, Oct 12 (Reuters) - Hopes that Turkey's credit ratings will be raised to investment grade buoyed local assets on Friday although a central bank warning that inflation is set to 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 its euro-dollar basket it stood at 2.0744, from 2.0774.

Rating agency Fitch said on Wednesday that Turkey was making good progress in dealing with the financial crisis and that it would soon look again at its rating, currently one notch below investment grade at BB+ with a stable outlook.

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

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

Turkey's main share index closed up 0.04 percent at 69,603 points, close to its highest since May 2011. The emerging markets index was 0.12 percent up.

The yield on Turkey's two-year benchmark bond

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

(Writing by Seltem Iyigun; Editing by Catherine Evans)

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