Turkish shares fell as much as 8 percent, the lira weakened and bond yields jumped on Monday on investor concerns about the impact of anti-government protests over the weekend in major cities across the country.
The lira weakened to 1.8960 against the dollar by 7:28 GMT, having earlier hovered around the 1.9 level, its weakest since January 2012.
Tens of thousands of Turks took to the streets on Sunday and many clashed with riot police in major cities. The protest against the partial destruction of an Istanbul park has widened into a broad show of defiance against the ruling Justice and Development party (AK Party).
“The risk clearly is that this all just drags on and then the danger is that violence racks up a notch taking this to an entirely different level - further heightening tensions and entrenching positions,” said Timothy Ash, head of emerging markets research at Standard Bank.
“I would expect the Turkish authorities, particularly the central bank to be active in re-assuring investors. For the central bank the problem is that the lira was weak last week on global market concerns.”
The main Istanbul share index fell 4.69 percent to 81,961.11 points, having fallen as much as 8 percent.
The two-year benchmark bond yield rose to 6.48 percent from 6.07 percent late on Friday. The yield on the 10-year bond yield climbed to 7.12 percent from 6.84 percent.
Streets were calmer on Monday morning after a night of noisy protests and violence in Istanbul, Ankara and other cities.