OREANDA-NEWS. March 26, 2015. Turkey's lira slipped on worries of renewed fighting with Kurdish militants after the military said it had fired artillery and mortar shells in retaliation at Kurdistan Workers Party (PKK) positions in southeast Turkey.

The PKK took up arms to carve out an independent Kurdish homeland in the southeast in 1984 but declared a formal ceasefire with Turkey two years ago after decades of violence.

Earlier in the week in a published note, JP Morgan had identified increased political noise "especially if the Kurdish peace process fails" as key risk areas for the Turkish economy.

The lira slipped to 2.5705 against the dollar at 1516 from 2.5572 before the announcement from the military.

The BIST 100 Index was up 0.85 percent, outperforming the broader emerging markets index which fell 0.16 percent.

The benchmark 10-year government bond yield rose to 8.32 percent compared with 8.25 percent on Tuesday.