Emerging market currencies and equities have also fallen in value since Friday, while investments seen as safe havens, such as the US dollar, Treasury bonds, gold and the Japanese yen have strengthened.
World markets shuddered on Monday, as Turkey's worsening currency crisis persuaded investors to dump equities and emerging markets and flee to safer assets such as government bonds and the dollar.
Aidan Yao, senior emerging Asia economist at AXA Investment Managers, said the chance that the Chinese government would extend aid to Turkey was not small, but would be based on political rather than economic calculations given the risks that would be associated with such a move.
He has threatened to seek new alliances - a veiled hint at closer ties with Russian Federation - and warned of drastic measures if businesses withdraw foreign currency from banks. Mr Erdogan favours lowering borrowing costs to fuel credit growth and economic expansion.
On Sunday, Erdogan lashed out at the U.S., threatening to find new alliances and new markets.
Overnight, the central bank announced a series of measures to "provide all the liquidity the banks need" - but offered no hint of a rate increase.
The spokesman said actions other than dialogue "only undermine the peace and stability and make the solution to a problem more hard and intractable". BNP Paribas (BNPP.PA) fell 1 percent.
Traders are also bracing for spillover as Turkey's woes roil western markets. As interest rates rise in the US, investors pull their money out of countries that had enjoyed strong economic growth but are perceived as somewhat riskier.
Leading the declines was the materials index, which fell 2 per cent as a stronger dollar pressured gold prices in the backdrop of a plunging Turkish lira. The recent history of globalisation in developing countries is full of such crises, including the 2000-01 Turkish banking and currency crisis. But the analyst house said the impact would be relatively limited because of the limited size of the Turkish economy. Stocks have fallen modestly in the US and Europe since last week, but analysts do not see a big risk of financial turmoil.
He also noted that Turkey is the "most reliable" and "best destination to invest", despite the negative propaganda and the tough challenges.
Erdogan, rejecting economic fundamentals as the cause of lira weakness, said Turkey was the target of an economic war.
The Trump administration doubled tariffs on Turkish steel and aluminum last week and targeted Erdoğan's interior and justice ministers with financial sanctions two weeks ago over Ankara's detainment of an American pastor. It tied the news reports to "forces behind the July 15 coup attempt", referring to a 2016 failed putsch that Turkey blames on a USA -based Islamic cleric.
Relations between the United States and Turkey had plunged to their lowest in decades following unprecedented sanctions declared by the United States on Turkey over US pastor Andrew Brunson, who faces terrorism charges and up to 35 years in prison if found guilty.
"We expect the USA to be faithful to our traditional friendly relations and North Atlantic Treaty Organisation alliance", Mevlut Cavusoglu said in his opening speech at the 10th Ambassadors' Conference in the capital Ankara. It said it would take legal measures against them but did not say what these would be.
German Chancellor Angela Merkel urged Turkey on Monday to ensure the independence of its central bank and allow it to make necessary changes to save its economy.
The Chief Prosecutor's Office in Istanbul has opened an investigation into actions threatening "economic security", while Turkey's financial watchdog launched a separate probe into what it described as "fake news" aiming to manipulate economy.