ISTANBUL, April 24 (Reuters) - The Turkish lira hit its weakest intraday level against the dollar since mid-October on Wednesday as investors weighed up risks generated by challenges to Istanbul election results and strains in relations with the United States.
Market attention was also turning to the Turkish central bank's rate-setting meeting on Thursday, when it was expected to keep its policy rate unchanged at 24 percent.
The lira weakened as far as 5.8792 from a previous close of 5.83, bringing declines this year to 10 percent. Dollar strength contributed to the lira weakening. It was the weakest level since Oct. 15, excluding a brief overnight "flash crash" in January.
"Assessments of the Istanbul election challenges are continuing, this is a risk. Also, U.S. relations are being discussed again," said one banker. "Negative lira expectations will continue to be priced in."
Turkey's election board on Tuesday rejected one of a series of objections by President Tayyip Erdogan's AKP to last month's Istanbul elections, which were narrowly won by the opposition. The AKP wants the elections annulled and re-run.
Unease about tense relations with the United States has been fuelled by the U.S. demand on Monday that buyers of Iranian oil, including Turkey, stop purchases by May 1 or face sanctions, a move to choke off Tehran's oil revenues.
Washington reimposed sanctions in November, unilaterally pulling out of a 2015 accord between Iran and six world powers to curb Tehran's nuclear programme. Ties with Washington have been under pressure for months over Turkey's order for Russian S-400 missile defence systems.
Turkey's hopes of avoiding punishing U.S. sanctions over the purchase appear increasingly pinned on intervention from Donald Trump, but the president has little leeway to counter Ankara's many critics in Washington.
U.S. Secretary of State Mike Pompeo and several prominent U.S. senators have warned Turkey it will face penalties for buying the S-400s under legislation which calls for sanctions against nations buying Russian military equipment.
Turkish media reported last week that Turkey was considering whether S-400s which Turkey is buying from Russia could be deployed in Azerbaijan or Qatar, rather than within Turkey, as a way to overcome a row with the United States over the purchase.
Foreign Minister Mevlut Cavusoglu was cited as telling Russian news agency Sputnik on Tuesday that deploying the S-400s in Azerbaijan or Qatar had never been on the agenda and Turkey was now talking with Russia about the timing of delivery.
The main BIST 100 stock index rose 0.25 percent, having dipped 0.94 percent on Monday. Markets were closed for a public holiday on Tuesday. (Reporting by Behiye Selin Taner Daren Butler Editing by Dominic Evans)