Significance of Palindromic sequences:
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Short palindromes serve as recognition sites of DNA for proteins having two-fold symmetry. E.g. Lac repressor proteins, Bacterial restriction enzymes.
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Binding of proteins to DNA is due to specific interactions between specific regions of DNA and proteins.
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Bacterial restriction enzymes serve as protection against foreign DNA by destroying it. These enzymes are specific for palindromic sequences of double stranded DNA.
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Palindromes give structural strength to transcribed RNA by hydrogen bonding in hair-pin loops.
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Long palindromic sequences contain genes coding for r-RNA.