Turkish lira up on court ruling

Markets are set to remain volatile despite the decision, anlaysts said

Turkey's currency, the lira, has rebounded after the country's highest court annulled the first-round of voting in presidential elections.

The government's choice for president had sparked street protests, and two days of market and political turmoil.

Analysts said that there was now a chance for a snap general election that may help ease political tensions.

The lira strengthened 0.9% against the US dollar on the news, and analysts said stocks and bonds may also recover.

Earlier in the day, the stock market's main index, the ISE National 100, had closed down 3.2%, extending Monday's 4% slump.

"General elections seem to be only way out of this business," said Saruhan Dogan of Finansbank.

"The ruling party has become a party which is straining social balances."

Hard choices

Turkey's current problems were sparked by the first round of voting for the country's new president, and the ruling party's candidate, Abdullah Gul.

Hundreds of thousands of people rallied in Istanbul over the weekend to protest against Mr Gul, and what many critics claim are the foreign minister's Islamic roots.

The court decision enables returning from the brink Inan Demir, Finansbank

The army, which has ousted three governments since 1960 and pressured one prime minister to resign in 1997, warned that it would not allow Mr Gul to take office.

On Tuesday, the constitutional court ruled there were not enough lawmakers present in parliament at the first ballot and, as a result, cancelled the vote.

A lot will now depend on the how the political parties decide to proceed.

There seems to be a willingness to call general elections, though the ruling Justice and Development Party (AK) said that Mr Gul would remain their candidate and would stand at a new vote on Wednesday.

However, government spokesman Cemil Cicek also said that the government was prepared to meet an opposition call for an early general election provided parliament agreed to lower the age limit for MPs to 25.

The AK party believe that move would help boost their voting base.

"Everyone was concerned that the tension between the government and the military would escalate further," said Inan Demir, an economist at Finansbank.

"Now the court decision enables returning from the brink."