REFILE-UPDATE 3-Turkey's lira hits record low but rebounds after quake, stocks slip

(Adds dropped word 'lira' in headline)

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Lira hits record low of 18.85 to the dollar

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Key stock indexes down 3.4-5%

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A number of companies suspended from trading

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Quake adds to election jitters, inflation woes and geopolitics

LONDON, Feb 6 (Reuters) - Turkey's lira briefly dipped to a record low and its main stock market fell 1.35% on Monday as a major earthquake added to pressures from a strong dollar and the war in Ukraine, as well as a surprise inflation reading.

The lira slipped to 18.85 in early trade before retracing its losses to end the day flat. The main equities benchmark at one point dropped as much as 5%, with banks tumbling 5.5%, before recovering most of the losses.

Yields on local 10-year government bonds hit their highest in nearly two months at 10.2%, while Turkey's credit default swaps, an insurance against sovereign default, jumped by 19 basis points from Friday's close to 545 bps.

Piotr Matys, senior FX analyst at In Touch Capital Markets, said the earthquake had compounded uncertainty ahead of crucial elections likely to be held in May.

More than 2,600 people were killed and thousands injured when a huge earthquake struck central Turkey and northwest Syria early in the morning, followed in the afternoon by another large quake.

Borsa Istanbul announced a temporary halt to transactions in shares of several companies in the earthquake zone.

Emerging markets are under pressure more widely, with currencies and stocks across the developing world feeling the pain from a sharp dollar rally on Friday in the wake of a strong U.S. jobs report, suggesting the Federal Reserve could stay hawkish for longer.

But Turkey is feeling additional strain.

Turks beset for years by soaring inflation and currency crashes will likely head to the polls in May for presidential and parliamentary elections - perhaps the most consequential in the century-long history of the republic.

Many international investors have quit in recent years amid recurring market turmoil and Ankara's embrace of unorthodox economic and monetary policies, including cutting interest rates in the face of soaring inflation.

Geopolitical tensions have been on the rise again recently, with Washington warning Ankara to be more active in preventing the export to Russia of chemicals, microchips and other products that can be used in Moscow's war effort in Ukraine.

Recent inflation data also raised concerns, said Tatha Ghose, FX analyst at Commerzbank, pointing to Friday's reading of 58% annual inflation in January - well above forecasts despite a favourable base effect.

"Last week's Turkish CPI print turned out to be somewhat of a shocker, re-igniting volatility in USD-TRY which had otherwise been conspicuously absent in recent months," Ghose said.

"A new window of FX volatility could be around the corner." (Reporting by Karin Strohecker, additional reporting by Bansari Mayur Kamdar, Azra Ceylan; Editing by Toby Chopra, Emelia Sithole-Matarise, Kylie MacLellan and Kevin Liffey)