Investors Hail Turkey Poll Result

Turkey's stock market hit a record high today as investors welcomed a decisive victory by the Islamist-rooted government led by prime minister Recep Tayyip Erdogan.

European leaders also hailed yesterday's historic landslide victory of the Justice and Development party (AKP), while urging Mr Erdogan to press on with economic and political reforms that would pave the way for EU membership.

The foreign secretary, David Miliband, said it was important for the 27-member bloc to "reach out" to Turkey amid reservations in France and Germany about Turkey joining the EU club.

"It is very important that across Europe we reach out to the new government in Turkey when it is formed," Mr Miliband told reporters as he arrived for EU foreign ministers talks in Brussels. "A stable and secure political situation in Turkey is massively in our interest and we will certainly want to be taking forward our links with this very important country."

With more than 99% of votes counted, television news channels were projecting that the AKP would win 341 of the 550 seats after getting 47% of the vote. Although the AKP would have a comfortable majority of about 130, its number of seats fell by 22 because more parties and independents got into parliament.

"It's a good result," said Katinka Barysch, chief economist at the Centre for European Reform, a London thinktank.

"Half of the electorate voted for the AKP, which has done a great job in stabilizing the economy, but it has a smaller majority" so Mr Erdogan will continue to pursue moderate policies.

The vote was a personal triumph for Mr Erdogan who called for early parliamentary elections after the army-backed secular elite blocked his choice of an ex-Islamist ally, Abdullah Gul, as the next president - the first divisive issue parliament must tackle after it convenes next week.

The new parliament will contain a strong contingent of ultra-nationalists from the National Action party (MHP), who will form Turkey's third-largest bloc with 71 seats. Two dozen pro-Kurdish independents won seats for the first time in a decade.

The AKP's landslide victory boosted market confidence as investors feared an inconclusive result that would prolong Turkey's political crisis over Mr Erdogan's choice of president. The ISE national-100 index closed 5.08% higher at 55,625.44, exceeding last week's record high, while the Turkish lira hit its highest levels against the dollar in more than two years.