Turkey stocks rebound after losses
* Turkish shares rebound after losses on political tensions
* Bonds, lira flat
ISTANBUL, Nov 23 - Turkish stocks traded stronger on Monday while bond yields and the lira were flat as investors eyed a possible end to the central bank's cycle of interest rate cuts.
The main share index <.XU100> rose 1.26 percent to 45,801.42, rebounding after heavy selling on Friday due to broader risk aversion in emerging markets sparked by worries about Ukraine debt.
The lira <IYIX=> closed at 1.496 against the dollar on the interbank market from Friday's close of 1.4955. The yield on the Aug 3, 2011, benchmark bond <0#TRTSYSUM=IS> was slightly higher at 8.81 percent from the previous day's close of 8.80 percent. It had dropped as low as 7.59 percent in October.
" interest rates are having a hard time going down despite last week's rate cut by the central bank. The spread between the base rate and the benchmark has widened to 2 percent, which was 1 percent on average in the last months," Tera Brokers said in a note.
Stocks lost 6.6 percent last week, due in part to tensions between the ruling Islamist-rooted AK Party and the secular judiciary over allegations of illegal wiretapping.
Assets have been particularly sensitive to such political discord as economic recovery in Turkey has failed to materialise at the pace some had hoped, and economic data, particularly output and unemployment has remained a source of concern.
Analysts said Turkish stocks had begun to look oversold on Monday, but investors may be searching for direction in coming days ahead of a market holiday later this week.
"Even as we saw selling, I expected a close of 46,000 today, but my eye is on the 44,500 mark. We approached it today but then pulled back. From a technical point of view if we break that level we could fall to as low as 40,000," said Selcuk Cekinmez of Ekinciler Invest.
Shares in Turkish media group Dogan Yayin <DYHOL.IS> closed 3.08 percent higher at 1.34 lira ahead of settlement talks due on Tuesday with the government over a massive tax fine.
Islamic lender Asya Bank <ASYAB.IS> rose 5.52 percent to 3.06 lira after JP Morgan raised its price target for the stock to 5 lira.
Mining company Koza Madenicilik <KOZAA.IS>, the second most-actively traded stock, rose 7.11 percent to 4.82 lira. Koza has recently outperformed the index after saying in September it may hold an initial public offering for its gold mining unit.
Ray Sigorta <RAYSG.IS>, an insurer, fell 1.21 percent to 1.63 lira. Chief Executive Nuzhet Atabak said the company does not target a top 10 market share amid intense price competition, Dunya newspaper reported on Monday. (Reporting by Thomas Grove and Alexandra Hudson; Editing by Toby Chopra/Ruth Pitchford) ((thomas.grove@reuters.com; Telephone: +90 212 350 7051; Reuters Messaging: thomas.grove.reuters.com@reuters.net))