ISTANBUL -- Turkish markets inched up on Thursday as investors held on to hopes for an end to months-long political turmoil through a government call for early elections.

The slight rise, which defied earlier expectations for profit-taking, was welcomed by brokers who predicted that the upward trend would continue in the short-run.

The national index of the Istanbul Stock Exchange gained 0.27 percent, or 28.57 points to close at 10,552.29 points, up from Wednesday's closing of 10,523.7 points.

"It inspires optimism that the index did not fall under Wednesday's closing. It would be normal for shares to stick at this level for a while if there are no nasty surprises on the political scene," Hakan Avci from Global Securities told AFP.

Shares had jumped 10.13 percent in Wednesday's trading after Prime Minister Bulent Ecevit bowed to intense pressure and called early elections for November 3 in a bid to end more than two months of political paralysis.

The crisis, sparked by Ecevit's ill health and a government rift on reforms required under Turkey's bid to join the European Union, had threatened to derail a crucial economic recovery program backed by a $16-billion loan from the International Monetary Fund (IMF).

But in Washington, chief IMF spokesman Thomas Dawson said talks on the next $1.1 billion tranche of the loan were going well.

"We are watching the situation closely," he said. "Our main concern is that the program is implemented and that progress continues."

In the foreign exchange market on Thursday, the Turkish currency also strengthened, trading at 1.655 million against dollar in the afternoon compared to 1.666 million in the morning on the Interbank money market. But it was slightly weaker from a rate on Wednesday of 1.652 million.

Yields on the most-heavily traded government bonds also crept down to 73.09 percent from 75.20 percent on Wednesday.

Nonetheless, investors remained wary of the run-up to elections, its possible results and the fate of key democratic reforms Turkey needs to fulfill requirements for its bid to join the EU.

"The market is currently stable upon reports of possible U.S. aid to Turkey in case of an Iraqi operation. But investors would start selling soon before a military strike became certain," Avci said.

Ankara fears both the financial and political consequences of a war on Iraq when it is trying to drag its economy out of the worst recession in years.