GLOBAL MARKETS-ECB's Greek bond ban hits Europe, Ukraine woes slam currency

* European stocks trim losses after ECB ban on Greek bonds

* Euro regains some ground after sharp drop

* Oil steadies after dropping 9 pct overnight

* Ukraine's currency slumps 30 percent after c.bank moves

* Wall Street set to open higher after ok jobless claims

data

By Marc Jones

LONDON, Feb 5 (Reuters) - A European Central Bank decision

to strike Greek bonds off its list of accepted collateral caused

European shares and bonds to fall on Thursday, though losses

were being cut and Wall Street looked set for a positive start.

As the ECB's move ratcheted up pressure on Greece's new

anti-austerity government, the pan-European FTSEurofirst

share index fell 0.4 percent after the euro

tumbled overnight.

Greek bank shares plunged over 20 percent and the

country's short-term debt yields surged to almost 20 percent

. Both then pared their losses, leaving stocks

down just 7 percent..

Futures markets pointed to 0.5-0.6 percent gains on Wall

Street, after encouraging jobless claims data were

released before Friday's non-farm payrolls figures.

In Europe, the ECB's move upped the stakes in a standoff

between the rest of the euro zone and Greece, where a new

government wants to rewrite its aid-for-reform agreements.

Greece's central bank will now have to provide the country's

banks with billions of euros of emergency funding. The ECB's

decision needs to be approved by its Governing Council, but some

at the bank sound as if they are preparing to play hardball.

"ELA (Emergency liquidity assistance) should only be awarded

for the short term and to solvent banks," Germany's ECB member

and Bundesbank chief, Jens Weidmann, told the business newspaper

Boersen Zeitung in an interview.

"I am of the view that we should apply strict standards with

ELA. If that should have consequences for financial stability,

then politicians must live up to their responsibilities."

The euro had dropped sharply after the ECB's move

late on Wednesday, but it recovered on Thursday, helped by the

strongest rise in German industrial orders since early 2008

.

The euro gained almost 1 percent on the dollar to put it

back to $1.1480, where it had traded before the Greek bond ban.

It also climbed more than 1 percent against the Swiss franc

, as traders speculated that the Swiss National Bank

was again buying euros to weaken the franc.

UKRAINE STRAIN

Oil markets steadied, after slumping nearly 10

percent in the previous session when the United States reported

another rise in crude stockpiles, which had heightened worries

about global oversupply.

Brent crude rose 83 cents to $54.99 a barrel, having

fallen more than a dollar intra-day earlier. U.S. crude

added 60 cents to $49.05.

"It will be some time yet before we see any sustained trend

reversal in oil prices," said Carsten Fritsch, analyst at

Commerzbank (Xetra: CBK100 - news) . "There's no basis for a sustained recovery at the

moment."

The Ukraine conflict was also back in focus. Russia accused

the United States of trying to tear Ukraine away from it and

warned any supply of U.S. arms to Ukraine would pose a danger to

Russia's national security.

The warning came as Ukraine's hryvnia slumped 34

percent after its central bank - which has been running out of

reserves - scrapped daily auctions that have been propping up

the currency.

It also hiked interest rates 5.5 percentage points to 19.5

percent, even though the economy is expected to face a recession

this year.

"There is still panic on the market, connected with ongoing

fighting," central bank governor Valeriia Gontareva said at a

news conference.

Asian stock markets had been weighed down by Greek worries

overnight, and China's move on Wednesday to ease its policy had

pressured the region's currencies.

Japan's Nikkei fell 1 percent after rising 2 percent

the previous session. Shares (Berlin: DI6.BE - news) in South Korea, Malaysia and

Singapore also fell and Chinese shares lost 1

percent.

The dollar was little changed against the yen at 117.35 yen

and a touch softer against a basket of six major

currencies. Safe-haven gold dipped to $1,262 an

ounce, after adding 0.8 percent on Wednesday.

"We think the Greek issue will likely stir things up for a

little while longer in the markets, which is why we think gold

should benefit, likely at the expense of equities," INTL FCStone (NasdaqGS: INTL - news)

analyst Ed Meir said in a note.

(Reporting by Marc Jones; Editing by Larry King)