Stocks in the emerging market Turkey declined almost two per cent to eight-week lows as Prime Minister Ahmet Davutoglu is set to leave after a dispute with President Tayyip Erdogan.
Stocks listed in Istanbul faced their biggest weekly drop since December 2013 of eight per cent so far. Local 10-year bond yields rose more than 30 basis points to one-month highs.
The ruling AK Party in Turkey is reportedly set to oust the Prime Minister following weeks of public dispute with the President.
"While the political situation stabilised after the AKP regained its majority in the early general election held in November, politics has once again emerged as a major risk for the lira, which is likely to remain vulnerable in the coming days," Rabobank analysts said.
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