UPDATE 2-Turkish lira, stocks tumble after uncertain poll result
(Updates prices, adds S&P statement, Bank Asya shares)
By David Dolan and Nevzat Devranoglu
ISTANBUL, June 8 (Reuters) - The Turkish lira tumbled to a record low and stocks were hammered on Monday as investors fretted over the possibility of a minority or coalition government after the ruling AK Party failed to win a majority in a parliamentary election.
The prospect of deepening political risk has further undermined investor sentiment on Turkey, already seen as an unattractive emerging market due to stalling economic growth, high debt levels and a heavy reliance on external financing.
With nearly all of the ballots counted, the centre-right, Islamist-rooted AKP had secured just short of 41 percent of the vote, according to broadcaster CNN TURK. That will probably leave it struggling to form a stable government for the first time since it swept to power more than a decade ago.
"This is definitely the most uncertain of outcomes," said Manik Narain, an emerging markets strategist at UBS. "It does open up the prospect of an early election and potentially there will be more friction in the AK Party."
The lira dropped 3.4 percent to 2.7530 to the dollar , paring some of its earlier losses when it hit a record low of 2.8094.
The lira's relentless decline - it is down more than 15 percent this year - means further pain for construction firms and other companies with dollar-denominated debt.
It may also put pressure on the central bank to raise rates to keep inflation in check. The central bank has avoided tightening monetary policy, leading to concern about political pressure on policy. Suite...