ANKARA -- Turkey's fractious center-left reverted to bitter recriminations on Friday after stumbling in efforts to unite against a strong election challenge by a party suspected of Islamist leanings.

Former Economy Minister Kemal Dervis, seen by the West and financial markets as important to future financial stability, said on Thursday he would not join the New Turkey Party (YTP) he had backed at its birth just before November polls were called.

Dervis, steward of a multi-billion dollar IMF crisis pact until he resigned last month, chided YTP's leader, former foreign minister Ismail Cem, for refusing to deal with another, rival party. He would continue pressing for center-left unity.

"Every word that people who do not and cannot keep their word say to Turkey, every such word is empty," Cem said in a statement clearly directed at Dervis. "It is natural that people who admit that they know nothing of politics and other things should fail to understand people and movements," he added.

Dervis, an ex-world banker brought to Turkey to tackle a financial crisis last year, acknowledges political inexperience.

Markets rose on Dervis's decision to continue to work for center-left alliance. Stocks were up two percent in mid- afternoon, the lira steadied at 1,635,000 to the dollar, in the middle of this week's range, and external debt nudged higher. Dervis told reporters after Cem's comments: "I really do wish him success. God willing, our friendship will continue."

Center-right parties are also divided by personal rivalries Disarray comes at a crucial time as Turkey presses for European Union (EU) entry talks and Washington looks to Ankara for support in a possible attack on neighboring Iraq.

Dervis said he would work together with the Republican People's Party (CHP), but did not say he would join it.

The CHP failed at the last, 1999, election to clear a 10 percent barrier for entry to Parliament but is one of the few parties that looks strongly placed to succeed this year.

___________ The Prospect of Oblivion __________ Prime Minister Bulent Ecevit's Democratic Left Party (DSP) has lost half its parliamentary deputies, most to the YTP, and the conservative Motherland Party could fail at the hurdle and others may only scrape in. Dervis may continue efforts to work with the DSP which faces the danger of political oblivion.

Parties would have to decide before September 11 if they wanted to unite under one party's flag.

Dervis's refusal to join the YTP would certainly come as a bitter blow to Cem and could imperil the party.

Little more than a month ago newspapers were full of photographs of Cem, Dervis and former deputy premier Husamettin Ozkan embracing each other at a meeting that was to open the way for the foundation of YTP.

Many, especially on financial markets, hoped the "troika" would unite the center-left and even take on center-right allies to overcome the schism that has dogged Turkish politics.

The main opponent facing all "mainstream" parties is the Justice and Development Party (AKP), which is the only grouping consistently winning well over 10 percent of the vote, drawing on voters angry over Turkey's worst recession since 1945.

The powerful armed forces, as well as many other elements of Turkish society, are suspicious of the AKP's Islamist roots. AKP describes itself as conservative and denies bringing religion into politics -- something banned by Turkish law.

The military led a pressure campaign that brought down Turkey's first Islamist-led government in 1997 after one year in office and continues to see political Islam as one of the greatest dangers facing Turkey.

Turkey's top business leader said on Friday it was essential Dervis returned as economy minister after the election in order to protect the IMF pact from being watered down.

"We want (Dervis)...at the helm of the economy and of the next economy ministry to make sure Turkey implements its program without calamity or accident," Tuncay Ozilhan, head of the influential Tusiad Business Association, told Reuters.