Turkish PM not ruling out law changes to stop closure

By Emma Ross-Thomas and Zerin Elci

ANKARA (Reuters) - Turkey's prime minister said on Thursday he would not rule out changing the constitution to stop his party from being closed down by a court on charges of Islamist activities.

The European Union candidate country has been locked in a political crisis since a chief prosecutor asked the Constitutional Court last month to shut down the ruling AK Party, sending financial markets sharply lower.

The AK Party, whose roots are in political Islam, denies the charges and has said the case is politically motivated.

"If it is necessary such a step (changing the constitution) will be taken but if it is not necessary the legal process will be followed just as it is," Prime Minister Tayyip Erdogan told a joint news conference with European Commission President Jose Manuel Barroso.

Analysts say the best outcome would be a compromise in the standoff between the AK Party and the secular establishment, including judges, opposition leaders, and army generals.

The case was brought after parliament passed a constitutional amendment to lift a ban on university students using the Muslim headscarf, which Turkey's secular establishment considers a symbol of political Islam.

Turkey's top court agreed last week to take up the case, which also seeks to ban 71 party officials, including Erdogan and President Abdullah Gul, from politics for five years.

The lira currency has lost some seven percent against the dollar since mid-March, hurt by the court case and global market turmoil. The stock market has since regained some of its losses.