ISTANBUL, Sept 14 (Reuters) - Turkey's bank stocks tumbled the maximum permitted 9.9% on Wednesday, reversing a multi-week rally driven by futures trading that helped Turkish shares outperform all emerging market peers this year.

The abrupt turnabout began on Tuesday when banking stocks shed 8%, driven in part by margin calls on futures positions, analysts said.

On Wednesday, the declines tripped Borsa Istanbul circuit breakers for big lenders Vakifbank, Akbank , Albaraka Turk, YapiKredi and Garanti BBVA, meaning trading in those stocks was temporarily suspended.

Before the turnaround, the main banking index had more than doubled since the beginning of August.

Analysts said the recent rise in the spot market had been driven by highly leveraged positions in the futures market (VIOP), with the subsequent decline resulting partly from margin calls.

"Leverage can be used in VIOP. Therefore, investors can acquire much more than their own equity," said one analyst who declined to be named.

"There might be investors who wish to take positions without funds or arbitrage funds. When a purchase goes through in VIOP, the price difference between VIOP and the stock deepens sharply," the analyst added.

"Your assets grow when the index rises. This way, you're able to trade in larger volumes and take riskier positions ... However, this also brings about margin liabilities that deepen any drop in the market."

Analysts said there were a couple of institutions carrying out the trades, but the funds behind the trades remain unknown.

So far this year, Istanbul's main BIST-100 index has risen by nearly 100% and the banking index is up more than 200%, making Turkish equities the best-performing in local currency terms across emerging markets. ( Reporting by Ebru Tuncay, Azra Ceylan and Halilcan Soran Writing by Daren Butler Editing by Jonathan Spicer and Mark Potter)