PRAGUE, Aug 29 (Reuters) -Polish bond yields climbed for a second straight session on Thursday, hitting a one-month high, after the country unveiled a 2025 budget plan with a rising deficit, while central Europe's currencies mostly moved to firmer levels after recent weakness.

Poland's government expects its general budget deficit to rise to 5.5% of gross domestic product in 2025, up from 5.1% seen this year, as it ramps up defence spending and drops some practices of the former administration that critics said kept costs off the books.

The rising deficit poses a challenge for eastern Europe's biggest economy which is already facing European Union budget discipline measures.

The 10-year benchmark bond yield PL10YT=RR climbed around 5 basis points andwas bid at 5.567% at 0926 GMT, up 16 bps since Wednesday's open before the budget announcement.

"The bottom line is that the fiscal policy in Poland in 2024-2025 is going to be more expansive than earlier suggested," Santander Bank Polska said in a note.

The zloty EURPLN= also firmed against the euro, up 0.1% at 4.2915, with the growth outlook - which was raised in the budget assumptions - providing some support.

In Hungary, the forint EURHUF= rose 0.2% to 392.65 to the euro.

Hungarian bond yields are also likely to face upward pressure after the head of the government debt agency said it would focus more on borrowing from domestic bonds and sources to keep foreign currency debt levels within limits.

On stock markets, some shares shed morning gains.

Czech utility CEZ CEZP.PR hit a near four-month low and was set to log lossesfor a third straight session after the country's finance ministry scrapped the idea of ending a windfall tax next year.

Reporting by Jason Hovet in Prague, Karol Badohal in Warsaw and Boldizsar Gyori in Budapest; Editing by Eileen Soreng

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