BUDAPEST/WARSAW: Polish stocks rose to their highest this year on Thursday, as government comments eased concern that a bill to convert Swiss franc mortgages to zlotys would damage the country's banks.
Central European markets remained encouraged by higher oil prices and rising Asian shares, which indicated risk aversion was abating. They also benefited from comments by the Federal Reserve on Wednesday that suggested the Fed was in no hurry to raise US interest rates again.
The zloty gained 0.4 percent against the euro by 1050 GMT and Warsaw's blue-chip equities index rose 1.3 percent to its highest levels since Dec. 30.
Polish assets plunged to multi-year lows last month as concern grew over government policies, which had led to a downgrade of the country's credit rating by Standard and Poor's.
A bill to convert Swiss franc mortgages, possibly at the expense of banks, still poses a threat to zloty assets. But worries over the bill eased after Deputy Prime Minister Mateusz Morawiecki said that conversion costs around 40 billion zlotys ($10.14 billion) would be a big threat for banks.
The zloty has stabilized around 4.4 against the euro as Central Europe's robust economies, which are not exposed to falling commodity prices, have increasingly come to be seen as safe havens. Declining chances that Polish banks will be hit and the Fed will raise rates are "likely to keep the zloty below 4.40 per euro," Bank Millennium said in a note.
PKO BP bank shares rose 1.6 percent. Rising crude and commodities prices lifted the shares of copper producer KGHM and oil group PKN Orlen.
Poland's and Hungary's government bond auctions drew hefty demand.
Polish government bond yields dropped by a few basis points, tracking a fall in debt yields across the euro zone. Polish five-year bonds traded at a yield of 2.22 percent.
Hungary's corresponding bond was more than four times oversubscribed at an auction and sold at an average yield of 2.43 percent, 4 basis points below secondary-market levels before the auction.
Overall, the government sold 65 billion forints worth of 3-, 5- and 15-year debt, raising its offer by 15 billion forints.
At a bond auction in Bucharest, yields rose from Wednesday's secondary market levels as investors took profit after a rally in Romania's debt markets in the past weeks.
Romania also opened the books on its 2025 and 2035 Eurobonds, which will be priced later in the day, Thomson Reuters news and market analysis service IFR said.
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