Turkish stocks pare gains after missile reports during Israel-Iran ceasefire

GDANSK, June 24 (Reuters) - Turkish stocks trimmed gains on Tuesday after the Israeli military said missiles were launched from Iran following the announcement of a ceasefire between the countries.

Istanbul's benchmark BIST 100 index .XU100 was up 2.3% at 0850 GMT, having risen as much as 3.04% in early trade. The banking index .XBANK was 3.43% higher, after earlier jumping 4.71%.

The rally was led by airline shares. Pegasus PSGUS.IS soared more than 7%, becoming the top gainer on the index, while Turkish Airlines THYAO.IS climbed 6%.

U.S. President Donald Trump announced on Monday a complete ceasefire between Israel and Iran, potentially ending the 12-day war that saw millions flee Tehran and prompted fears of further escalation in the war-torn region.

However, the Israeli military said on Tuesday its defensive systems were working to intercept missiles launched from Iran towards Israel, and told the public to enter protected spaces and remain there until further notice.

"The ceasefire initially improved risk sentiment significantly," Mustafa Kemal Eski, assistant research analyst at Marbas Menkul Degerler, said. "But gains were capped after Israel reported fresh missile launches from Iran," he added.

Israeli Defence Minister Israel Katz said he had ordered the military to strike Tehran in response. Iran denied violating the ceasefire.

"These moves triggered some sell-off, but risk appetite remains strong as long as the ceasefire holds," Eski said. "What would really change the mood is if Trump walks back on his ceasefire push and the conflict escalates again."

The main BIST 100 share index fell around 3.5% when compared to its close on June 11, before the 12 days of strikes between Israel and Iran.