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* Manufacturing capacity falls 1.7 points on month

* Boosts expectations for more modest Q3 growth

Turkish capacity utilisation dipped 1.3 percentage points in August, slipping from the previous month's two-year high and boosting expectations for more moderate growth in the third quarter.

Manufacturing confidence, an indicator of the industry's outlook, also posted a slight fall.

The lira was steady at 1.529 against the dollar on the interbank market.

Turkey posted 11.7 percent economic growth in the first quarter and is expected to post near double-digit growth in the second, but a lower base effect, sagging demand for Turkish exports and a slight cooling in domestic economic activity is likely to temper the growth seen in the first half.

"I think that the August figures tell us that the strong first and second quarters are behind us and a normalisation has started," said Ozgur Altug, chief economist at BGC Partners in Istanbul.

Capacity utilisation, a leading indicator of manufacturing output and economic growth, fell to 73.4 percent in August from 74.7 percent a month earlier, the central bank said.

Capacity utilisation has been above the 70 percent mark in Turkey's fast-recovering economy since April.

The manufacturing confidence index, an indicator of industrial activity and growth in the economy, fell to 111 points in August from 112.7 in July, the central bank said.

Weaker demand in the European Union, Turkey's largest trading partner, has been expected to hit manufacturing, and the central bank has cited lower demand there as a reason for keeping benchmark interest rates low.

Ozgur Altug Comments: Turkish Capacity Utilization Falls From 2-yr High - Yahoo!Asia

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