By Seltem Iyigun

ISTANBUL, Jan 24 (Reuters) - Turkish shares hit more record highs on Thursday on expectations of strong fourth-quarter company earnings, while the lira nudged higher amid hopes of a second sovereign rating upgrade.

The main Istanbul share index was up 0.3 percent at 86,574 points, after earlier touching an all-time high of 86,787.15, outperforming a 0.4 percent fall in the global emerging markets index.

'Turkish shares are decoupling positively as Turkey is seen as a safe haven. Turkey's (2013) growth will be one of the fastest, and the expectations for the banking sector fourth-quarter gains are strong,' said Alper Erginol, research assistant manager at Oyak Securities.

Turkish banks will start releasing their fourth-quarter results at the end of this month.

By 0848 GMT, the lira was at 1.7709, a touch stronger than 1.7717 late on Wednesday. Against its euro-dollar basket it slightly eased to 2.0643, from 2.0637.

The lira hit 1.7513, its strongest in 10 months last week, fuelled by expectations of a second credit rating upgrade for Turkey that would draw in more foreign investment funds.

'The cautious stance of Turkey's central bank increases investors' confidence in Turkey,' Erginol said.

'Hopes for a second credit rating upgrade are also supportive,' he said, adding they were expecting a rating upgrade for Turkey in the May-June period.

Ratings agency Moody's said on Thursday it expected Turkey's gross domestic product to grow 3.8 percent in 2013, up from an estimated 3.0 percent in 2012 but below the recent boom prior to the 2009 recession.

Turkey is hoping another major ratings agency will lift it to investment grade, after Fitch did so last November. A second upgrade would enable Turkey to join benchmark investment grade bond indexes, a status that many funds require before investing.

The yield on the two-year benchmark bond was at 5.86 percent, from Thursday's close at 5.84 percent. The two-year yield was at 6.44 percent at the start of 2013.

'I expect bond yields to fall further on the back of credit rating hopes and expectations the central bank will lower the interest rate corridor,' said Burak Maldar, a vice president at Halk Invest.

Turkey's central bank cut its overnight borrowing rate to 4.75 percent from 5 percent and its lending rate to 8.75 percent from 9 percent on Tuesday. It held its one-week repo policy rate at 5.50 percent.

(Editing by Hugh Lawson) Keywords: MARKETS TURKEY/

(seltem.iyigun@thomsonreuters.com)(+90 212 350 70 62)(Reuters Messaging: seltem.iyigun.thomsonreuters.com@reuters.net)

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