(Updates prices, adds background)
By Azra Ceylan and Canan Sevgili
Feb 15 (Reuters) - Turkey's stock index rose nearly 10% on Wednesday after five days of earthquake-related closure and last week's steep losses, as government measures to prop up equities looked to be working, but sentiment was fragile with the lira hitting a record low.
Borsa Istanbul halted trading on its equity and derivatives markets two days after the Feb. 6 earthquakes that claimed more than 41,000 lives in Turkey and neighbouring Syria.
Authorities issued a series of regulations on Tuesday to shore up equity markets in the run up to the reopening after steep drops in share prices in the two days following the quake saw market capitalization of Turkish stocks drop by $3.9 billion on the country's MSCI index, according to Refinitiv data.
"Turkish stocks have benefitted from the intervention in the market we have seen from the government there, all designed to prevent a crash following the closure," said analyst Stuart Cole, head macro economist at Equiti Capital.
However, questions remained over the strength of underlying sentiment and what investors would do without official support, Cole said. "I would also question how long the authorities can continue with this support given the fragile nature of official finances," he added.
Turkey's lira hit a fresh record low of 18.9010 to the dollar before retracing some of its losses to trade down 0.2%. The currency has weakened around 1% since the start of the year.
RAPID NEW REGULATIONS
Turks beset for years by soaring inflation and currency crashes have piled into the country's stocks in recent months, lifting the main index by 200% last year. Local investors now account for 70% of stock holdings, up from 35% in 2020.
Turkey's main index is down 10% year-to-date compared to a 5% gain in wider emerging market stocks.
Turkish authorities pushed through new regulations including measures incentivizing company share buyback programs, and increasing obligatory pension fund allocation for stocks.
The withholding tax on share buyback programs was cut to zero from an earlier 15%, while the general assembly decision mandate for share buybacks was also waived, allowing listed firms to start programmes with just a management board decision.
Several listed companies, including flag carrier Turkish Airlines and lenders Isbank, Halkbank and Vakifbank have announced some 16 billion lira ($849 million) worth of share buyback programs since Tuesday, according to a Reuters tally.