U.S. eyeing sanctions over Turkey's S-400 buy -Mnuchin

Adds Turkish bond movement, background

WASHINGTON, Sept 9 (Reuters) - U.S. Treasury Secretary Steven Mnuchin said on Monday that the Trump administration was considering imposing sanctions on related to Turkey's purchase of the Russian-made S-400 air defense missile system, but no decisions have been made.

"We're looking at that, I'm not going to make any comments on any specific decisions, but we are looking at it," Mnuchin told reporters outside the White House when asked if the Treasury was considering such sanctions. He did not specify any potential targets.

Turkey's dollar-denominated sovereign bonds US900123BG46=TE, US900123BJ84=TE, US900123CG37=TE fell after Mnuchin's comments.

Ankara and Washington have been at loggerheads over Turkey's purchase of the S-400 system, which the United States says is not compatible with NATO defenses and poses a threat to Lockheed Martin's LMT.N F-35 'stealth' fighter jet.

Russia delivered a second battery of S-400s last month, according to Interfax news agency, which cited Russian Vladimir Putin. Ankara had received its first shipment in July.

Washington has previously warned Turkey that it will face sanctions over the purchase and removed the country from its f-35 program, but Ankara has so far dismissed the warnings.

The dispute over the air defense missile system is one of several issues straining ties between the United States and Turkey that include the ongoing conflict in Syria, among others.

(Reporting by David Lawder and Susan Heavey; Editing by Kevin Liffey and Nick Zieminski)

((David.Lawder@tr.com; +1 202 354 5854; Reuters Messaging: david.lawder.thomsonreuters.com@reuters.net))

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