ISTANBUL, (Reuters) – Turkish assets fell on Friday against a background of domestic political worries triggered by a prosecutor’s bid to close the ruling AK Party, with trade subdued due to the European and U.S. market holidays.

Shares of leading jeweller Goldas GOLDS.IS tumbled 10 percent, hit by a legal wrangle with French bank Societe Generale over a disputed consignment of gold.

The lira closed at 1.2440 against the dollar on the interbank market, steady compared with a close of 1.2445 on Thursday, but eased to 1.2480 in Monday-dated trade. The currency has eased 6.1 percent against the dollar this year.

Istanbul’s main share index closed 0.32 percent lower at 39,719.08, bringing its losses for the week to 6.7 percent but off its 14-month low on Monday.

“Because of foreign markets being closed we had a day without foreign investors and the proof of that is the volume of 669 million lira ($535 million),” said Turkish Investment strategy director Gokhan Uskuay.

Trading volume was down 53.8 percent from a day earlier.

Concerns about political instability have weighed on sentiment since a top prosecutor last week asked the Constitutional Court to close the ruling AK Party for allegedly trying to build an Islamic state in secular Turkey.

The AK Party, which has Islamist roots, denies the charges.

The prosecutor called for 71 party officials, including the prime minister and president to be banned from politics for five years.

Goldas closed 9.86 percent lower at 2.56 lira after the emergence of a legal dispute between the company and French bank Societe Generale over the fate of several tonnes of gold which the bank had reportedly asked Goldas to sell.

In a sign of the impact of global market volatility on Turkey, the Central Bank left key interest rates unchanged on Wednesday as expected, with the overnight borrowing rate at 15.25 percent and the lending rate at 19.25 percent.

Amid the market jitters, the Capital Markets Board said it had extended the period for Turkey’s Albayrak group to hold an initial public offering for its real estate investment trust (REIT) until Jan. 7, 2009.

The construction-to-media Albayrak conglomerate had previously said the the group was planning to hold the IPO in the first or second quarter of this year.

Bonds also weakened, with the yield on the Oct. 7, 2009 benchmark bond rising to 18.30 percent from 18.28 percent on Thursday.