WARSAW, Feb 17 (Reuters) – The currencies of Poland and Hungary fell on Thursday, hit by reports of bombings in eastern Ukraine and a verdict from the European Union’s top court which could lead to the loss of funding in Warsaw and Budapest.

Russian-backed rebels and Ukrainian forces accused each other of firing across the ceasefire line in eastern Ukraine on Thursday, sounding the alarm at a time when Western countries have warned that a possible Russian invasion could be imminent.

“The world wanted to see an end to the Russian-Ukrainian situation but today worse news came in…so there is a small retracement in our region,” said a Warsaw-based trader.

The trader also said Wednesday’s decision by the European Court of Justice weighed on the zloty and the forint. The decision paved the way for billions of euros in funds to go to Poland and Hungary, whose populist leaders are accused by the bloc of violating democratic rights. Read more

At 09:57 GMT, the zloty was 0.22% weaker against the euro at 4.5093. The forint was 0.17% softer at 356.00. The Romanian Leu and Czech Koruna were little changed at 4.9440 and 24.3770 respectively.

Bonds were mixed ahead of US jobs data that economists said could influence global returns. The Polish 10-year rate rose about 1 basis point to 3.949%, while the Czech 10-year rate fell about 3 basis points to 3.021%.

“Strong U.S. labor market data should theoretically push up yield curves in the United States and, therefore, yield curves globally,” the PKO BP analysts wrote in a note.

“A possible upward shift in US yield curves will support the return of Polish bond yields towards 4.0%.”

Stocks fell across the region on concerns over Ukraine, with the main Budapest index (.BUX) falling 0.71%.

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Reporting by Alan Charlish in Warsaw, Jason Hovet in Prague, Anita Komuves in Budapest

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