Kuwait's prime minister has offered to drop a proposed media law widely criticised by private newspaper editors as an assault on freedom of speech that fuelled political tensions in the Gulf state.
The "Unified Media Law", which would steeply increase fines on journalists deemed to have insulted senior ruling family members and the state, was passed by the government this month.
But it still needs the approval of parliament, where some lawmakers have expressed unease.
"If you are against the bill, it will be shelved," Prime Minister Sheikh Jaber al-Mubarak al-Sabah told a gathering of editors, state news agency KUNA reported late on Wednesday.
Kuwait's media are among the freest in the Gulf region and the government generally tolerates more dissent, but in recent months dozens of activists have been charged with insulting the emir and several have been handed jail sentences, including a prominent opposition politician.
The Kuwaiti stock market rose 1 percent in early trade on Thursday and one analyst said this was due to the prime minister's comments which suggested a willingness to compromise.
"This sent a message to reassure the media that the political situation is stable and that the government seeks to calm things, which will have a positive impact on the economic environment," financial analyst Majdi Sabri said.
Kuwait's current parliament and cabinet have been more cooperative than their predecessors, where a long-running power struggle stifled investment plans. Market-watchers are keen to see whether the improved political environment can continue.
New York-based campaign group the Committee to Protect Journalists criticised the draft media law on Wednesday, saying the legislation would severely undermine press freedom.