By Ceyda Caglayan and Matthias Inverardi

ISTANBUL/DUSSELDORF, Aug 29 (Reuters) - German consumerelectronics retailer MediaMarkt has suspended plans to buyshares in Turkey's Teknosa TKNSA.IS , two sources close to thematter said, after recent falls in the lira hit profits ofTurkish firms.

One source said MediaMarkt was reviewing its valuation ofthe Teknosa stake following the lira's slide to record lows,which dampened demand for imported electronics and raised rentalcosts for stores, which are mainly priced in foreign currency.

"MediaMarkt has suspended the plans due to recent foreignexchange volatility. It will review the valuation of Teknosa anddecide later to go ahead with the acquisition or not," thesource said, adding a decision may not be reached until October.

Another source confirmed the negotiations were stalled, butsaid they were not completely cancelled.

MediamarktSaturn, which owns MediaMarkt, declined tocomment. Teknosa and parent Sabanci Holding did not immediatelyrespond to questions about the issue.

The sources did not specify the size of the stake MediaMarktwas seeking. Sabanci Holding owns just over 60 percent ofTeknosa. Another 10 percent is held by Sabanci family members,and the rest are free floating shares.

Ceconomy, the parent company of MediaMarkt andMediaMarktSaturn said in a quarterly report two weeks ago thatthe weak lira had weighed on sales in Turkey.

Turkey's electronic goods market was valued at 54 billionlira at the end of 2017, 16 percent up from the previous year,Teknosa said in its annual report.

Despite continued growth potential on the back of Turkey'syoung population, however, several firms have already downsizedor closed because of intense competition and the steady erosionof the lira even before this year's 40 percent slide.

That fall in the currency has caused unease among othercompanies planning Turkish investments. Japanese firm Toyo Ink 4634.T postponed plans this week for a polymers plant inTurkey, while retailer Amazon AMZN.O also pushed back itsentry into Turkish markets.

Britain-based Electroworld and French company Darty have inpast years left the Turkish market, selling their stores toBimeks BMEKS.IS , while Germany's Electronic Partner and U.S.electronics giant Best Buy sold out to Teknosa.

Those exits left MediaMarkt as the only internationalelectronics company active in the country. Domestically,Teknosa, Bimeks and Vatan are the leading actors in the sector.

Bimeks however has slashed the number of stores in Turkey tojust six from 130 at the end of 2016. Teknosa shut 70 stores in2016, leaving it with 207 across the country now, and declaredlosses of 10 million lira in the first half of this year.

While MediaMarkt Turkey does not disclose its revenue, ChiefExecutive Officer Yenal Gokyildirim has said it grew 30 percentand opened 12 new stores across the country in 2017. MediaMarkthad 68 stores in Turkey at the end of June, according the parentcompany's quarterly report.

In March, Gokyildirim said Turkey, along with Germany andSpain, was driving the company's sales growth and thatMediaMarkt aimed to expand activities in the Turkish market.

($1 = 6.4440 liras)

(Editing by Dominic Evans and David Evans) ((ece.toksabay@tr.com; +90 312 2927022; Reuters Messaging:ece.toksabay.reuters.com@reuters.net))