ANKARA - Turkey's highest court is to announce its verdict on Wednesday on whether to close the governing AK Party on charges of Islamist activities, the Anatolian state news agency said.

The AK Party was re-elected with 47 percent of the vote last year and denies charges of violating the secular constitution by supporting Islamist activities.

Political analysts say the fact the 11 Constitutional Court judges appeared to have reached a quick verdict suggested a favourable outcome for the governing party. The judges began deliberating on Monday. The case first reached the court in March.

Financial markets have rallied on optimism over the past week that the court will rule not to ban the party. The lira currency rose as much as two percent against the dollar and shares gained 4 percent.

A former Constitutional Court judge, who declined to be named, told Reuters a quick verdict meant either rejection of the case or sending it back to the prosecutor for re-submission with amendments.

Turkey's government is at odds with the secularist establishment, including the military and judiciary, over the role of religion in the officially secular but predominantly Muslim country. Critics say the court case amounts to a "judicial coup" against a democratically elected party.

The AK Party has rejected the charges of Islamist activities. It points to its pro-reform, pro-business record in office as evidence.

EU CRITICISM

Hardline secularists accuse the party of harbouring a hidden Islamist agenda by seeking to ease restrictions on religion in public life. The party says it is allowing more freedom of religion and expression, as demanded by the population.

Vatan newspaper, quoting a reliable source, said only six of the 11 judges would vote in favour of closure, fewer than the minimum seven required.

If the party were closed, the court would then decide whether Prime Minister Tayyip Erdogan, President Abdullah Gul and 69 AKP members should be banned from politics for five years.

The European Union has criticised the case, saying the kind of charges raised by the prosecutor should be debated in parliament and decided through the ballot box, not in the courtroom. Turkey is seeking membership of the EU.

Turkey has banned more than 20 political parties for Islamist or Kurdish separatist activities, including the predecessor of the AK Party as recently as 2001, but none has been as popular as this governing party.

If the party were closed, its parliamentary members would most probably form a new party and keep power. If Erdogan is also banned, analysts expect the government to fall and either by-elections or early parliamentary elections to follow.