UPDATE 1-Swiss National Bank increases first half profit to $48 billion

(Adds further detail and background, economist comment)

ZURICH, July 30 (Reuters) - The Swiss National Bank increased its first half profit to 43.5 billion Swiss francs ($47.96 billion), it reported on Friday, as buoyant stock markets boosted the value of the central bank's foreign currency investment pile.

The SNB posted a profit of 44.5 billion francs from its foreign currency positions, helped by interest and dividend payments from the mountain of bonds and stocks it holds.

The SNB also made a valuation loss of 1.4 billion francs on its gold holdings, and a 0.6 billion franc profit from Swiss franc positions, mainly negative interest rates it charges commercial banks on some of their holdings.

The half-year profit would have been even higher if it had not been for an appreciation of the franc versus the euro and dollar during the second quarter, which reduced the value of overseas profits when converted back into Swiss francs.

Profit from its forex positions shrank to 4.7 billion francs during the second quarter from 34.4 billion francs a year earlier.

The SNB's profits have raised pressure from politicians for the central bank to hike its payout to the Swiss national and regional governments, especially to help pay for the costs of COVID-19 support measures including short-time working compensation.

But the central bank, which this year upped its payment to 6 billion francs, has been resistant to increase its payout further, saying it needs to put aside more money to prevent its equity being wiped out by a sudden plunge in the value of its assets.

Economists at UBS don't expect the central bank to start selling off its foreign currency reserves to reduce its vast balance sheet, which has balooned to 1 trillion francs and increased the central bank's earnings potential.

"Such a move could lead market participants to follow suit and bet on a stronger franc," UBS economist Florian Germanier said, adding a sale could also lead to market expectations regarding central bank policy.

"The market could interpret any selling of currency reserves as a potential decoupling from the ECB, and hence would increase their interest rate expectations, which would in turn lead to Swiss franc inflows." ($1 = 0.9071 Swiss francs) (Reporting by John Revill; editing by Brenna Hughes Neghaiwi)