Turkish shares rise after Iran ceasefire deal, lira set for rare daily gain

ISTANBUL, April 8 (Reuters) - Banking and airline stocks led a more than 4% rise in Turkish shares and the lira was on track for a rare daily gain on Wednesday, as the two-week Middle East ceasefire sparked a relief rally across global markets.

At 1057 GMT, Turkey's blue-chip BIST 100 index .XU100 was up 5%, while the banking index .XBANK rose 9%. The BIST 100 had fallen 1.45% on Tuesday.

Shares in Turkish Airlines THYAO.IS were up 8% while airline Pegasus PGSUS.IS climbed 7%.

Shares in Turkish petrochemical companies Tupras TUPRS.IS and Petkim PETKM.IS slid around 5% and 6% respectively, following strong drops in oil prices overnight.

The United States and Iran have agreed to a two-week ceasefire and Pakistan Prime Minister Shehbaz Sharif said in a post on X that he had invited Iranian and U.S. delegations to meet in Islamabad on Friday.

The lira TRYTOM=D3 traded at 44.5125 against the dollar, strengthening from Tuesday's close of 44.6065.

Turkey's 5 year credit default swaps (CDS), a measure of risk, fell 31 basis points from the previous close to a near one-month low of 254 bps, according to S&P Global Market Intelligence data.

The currency had lost about 1.5% in value since the U.S.-Israeli strikes on Iran began at the end of February. With a year‑to‑date loss of 3.6% and inflation reaching to 10% in the first three months of the year, the lira has gained in real terms.

Before the two-week ceasefire agreement, economists had been expecting the central bank to reflect a cumulative 300 basis points of tightening delivered via liquidity measures in the main policy rate, which stands at 37%.

Markets are now watching whether the two-week ceasefire evolves into a more permanent arrangement, which could reshape expectations for policy tightening at the central bank's next monetary policy committee meeting on April 22.