Adds Simsek quotes, background

By Canan Sevgili and Ezgi Erkoyun

April 7 (Reuters) - Turkish stocks dropped more than 3% on Monday, led by banks and fuelled by a global market selloff over U.S. tariffs and counter moves, as well as ongoing pressure on the lira due to the jailing last month of Istanbul's mayor.

Istanbul's main BIST 100 share index .XU100 was off 2.5% at 0850 GMT after opening down 3.4%. The banking index .XBANK was down 3.35%. The BIST 100 had closed 1.10% lower at 9,379.83 points on Friday.

The lira TRYTOM=D3 traded at 38.0115 against the U.S. dollar, largely unchanged since a dramatic selloff of as much as 12% on March 19 when Ekrem Imamoglu, the mayor, was detained on graft and other charges that critics said were politicised.

The currency touched a record 42 to the dollar that day before authorities stabilised it with steps including billions of dollars worth of foreign currency sales.

Major global stock indexes plunged again on Monday as U.S. President Donald Trump showed no sign of backing away from his sweeping tariff plans, and as investors bet the mounting risk of recession could see U.S. rate cuts as early as May.

Turkey was slapped with a 10% U.S. tariff, lower than many other countries, prompting government officials to point out the potential benefits of being a relatively cheaper source of goods.

Finance Minister Mehmet Simsek said the recent lira weakening could cause a rise in April inflation, but he added that disinflation will continue as most of the impact of volatility will be temporary and limited.

Falling oil prices would help reverse Turkey's current account deficit this year, he said. "Turkey is one of the countries that will be most positively affected by the fall in oil prices and natural gas prices."

Oil prices fell more than 3% on Monday, extending losses from the previous week, on growing concerns that a global trade war could slow the world economy and weaken demand, following China's retaliation against Trump's tariffs.

Meanwhile, Turkey's main opposition leader Ozgur Ozel on Sunday pledged further protests against the jailing of Imamoglu, who is President Tayyip Erdogan's chief rival, aiming to sustain the country's biggest demonstrations in more than a decade.

Turkish stocks and bonds have largely fallen since Imamoglu's detention and later his jailing pending trial, raising concerns among investors over eroding rule of law, criticism Ankara rejects on grounds the judiciary is independent.

Imamoglu was chosen as his party's future presidential candidate shortly after his arrest.

(Reporting by Canan Sevgili; Editing by Jonathan Spicer, Daren Butler and Emelia Sithole-Matarise)

((canan.sevgili@thomsonreuters.com;))