BUDAPEST: Polish stocks hit an eight-month high on Wednesday, reflecting optimism about the country's growth prospects next year and shrugging off political tension as opposition lawmakers continued a sit-in in parliament.
Central European assets mostly weathered uncertainty in Poland, Bulgaria and Romania as investors expect economic growth in the region to pick up to 3 percent or more in 2017.
Political tension in Warsaw, however, has highlighted longer-term risks to asset prices in the region's biggest economy.
Parliament lifted a temporary ban on media access on Tuesday in an effort to defuse anti-government protests, but the opposition said the government should do more for democracy and opposition lawmakers occupied parliament's debating chamber for a sixth day on Wednesday.
Critics say the media ban was the latest of several government measures that have eroded the independence of the media and the judiciary.
The zloty traded at 4.4098 against the euro at 1228 GMT, a touch weaker from Tuesday, after testing a five-week high at 4.403 earlier in the day.
Bulgaria's stock market index rose 0.4 percent after outgoing president Rosen Plevneliev clarified the timetable towards early elections.
With a 25 percent gain Sofia is the best-performing bourse in the region this year after Budapest, which was flat on Wednesday but OTP Bank gained 1 percent after it signed a deal to buy Societe Generale's Croatian unit.
The leu eased 0.1 percent after Romania's Social Democrat Party (PSD) proposed a leftist woman from the tiny Muslim minority as prime minister.
That marks progress towards setting up a government, but appointing Sevil Shhaideh may not end tension with President Klaus Iohannis who earlier ruled PSD head Liviu Dragnea out of the premier's job.
The Czech crown remained stuck on the weaker side of the central bank's ceiling at 27 against the euro.
Selling the euro against the crown in 12-month forwards should be a top trade of 2017 as the crown could surge if the cap is removed in the second half of next year as expected, UBS said in a note.
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