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Markets warm to Turkish vote

Recep Tayyip Erdogan: Promises to tackle Turkey's economic problems
Recep Tayyip Erdogan: Promises to tackle Turkey's economic problems

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ISTANBUL, Turkey -- Investors in Turkey appear to be warming to weekend election results which saw an untested pro-European Union government with possible Islamist leanings swept to power in a landslide vote.

The election of the Justice and Development Party (AKP) initially spooked financial markets on Monday, sending the country's bonds and currency tumbling.

However, Turkey's main stock index ended more than 6 percent higher, while the lira recovered from a record low of 1,703,500 to the U.S. dollar to end at 1,672,000 -- up slightly from Friday's close.

Sunday's victory by the AKP surprised some investors who had expected a win by a coalition led by the centre-left Republican People's Party.

But the huge majority showing by AKP was taken as a sign by traders that crisis-prone Turkey will now have a strong government to tackle the country's economic problems.

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"The market is giving the AKP credit. It's welcoming the formation of a one-party government, something that has been looked forward to for a long time after the coalition government,'' Mehmet Pinar, an analyst at Deniz Investment, told Reuters.

Recep Tayyip Erdogan, the AKP leader who is banned from parliament after being convicted of inciting religious hatred, was quick to assure voters that he was pro-West and committed to reform.

"AKP is ready to take responsibility to build up the political will to accelerate the European Union entry process and to strengthen the integration of our economy with the world economy and the implementation of the economic programme," Erdogan told a news conference.

Ali Coskun, the party's economic spokesman, told Reuters that the AKP was ready to meet measures set by the International Monetary Fund to help Turkey pay down its mountain of debt.

"So far the party definitely continues to give the message it's not going to be an extremist party and it will remain within constitutional boundaries and within the main lines of the economic programme," Hakan Avci, strategist at Global Securities in Istanbul, told Reuters.

But he cautioned that Monday's positive reaction to the AKP win may not last for long.

"There's always been relief rallies around elections in Turkey,'' Avci said. "The fact that there's a new government which can actually do something without having to clash within itself is a very strong factor... This is going to be a traders' market for some time. It will be difficult to judge the ups and downs of the market.''



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