Turkish assets weakened on Tuesday, with stocks sliding as much as 2 percent after Turkish jets shot down a Russian-made warplane near the Syrian border, adding to nervousness among investors already rattled by months of political uncertainty.
Caution ahead of the central bank policy-setting meeting later in the day and speculation about the naming of the new Cabinet added to pressure on prices.
The central bank is expected to hold rates steady for the ninth straight month, as it looks to take its cue from an expected tightening by the U.S. Federal Reserve.
Prime Minister Ahmet Davutoglu could name his new Cabinet later in the day and investors' focus is on whether it will be composed of technocrats committed to fiscal discipline or allies of President Tayyip Erdogan set on a more populist agenda.
The BIST 100 index, the broadest measure of Turkish stock performance, was down 1.4 percent at 78,601.13 by 0957 GMT, paring an earlier loss of 2 percent.
The lira currency was at 2.8672 to the U.S. dollar, weaker than its close of 2.8500.
Data from Markit showed that five-year credit default swaps rose nine basis points (bps) to 254 bps, the highest since mid-November after news of the downed jet.
Turkish Eurobonds fell across the curve with the 2030, 2034 and 2036 issues all down 0.6-0.8 cents in the dollar, according to Tradeweb data.
