A Cypriot court today threw out homicide charges against two Greek Cypriots accused of taking part in the assassination of U.S. Ambassador Rodger Davies in 1974 after the Turkish invasion of this island.

The court's decision, citing lack of evidence, dashed American hopes of getting a homicide conviction in the assassination and with it the first severe judicial punishment anywhere against terorists for slaying a U.S. diplomat.

The Cypriot decision four months ago to bring the case to trail had been widely seen here as partly a political decision by President Makarios, who was anxious to strengthen the Carter administration's support for his government in negotiations with Turkey over the island's future.

The defendants still face riot and fire arm violation charges that could jail them for 15 years, and American diplomats appear hopeful that conviction on these lesser charges will bring stiff sentences.

With the lack of progress in negotiations with Turkey, however, the Makarios government's eagerness to placte Washington appears to have diminished. Makarios' practice of conciliating rival factions on this small island could take precedence now over any pro-U.S. moves, observers say.

The two defendants, Ioannis Ktimatias, 39 and Neoptolemos Leftis, 50 allegedly belonged to the powerful rightist EOKA-B underground move ment. This guerrilla group was enraged at the United States after the 1974 Turkish invasion, charging U.S. collusion.

The dropping of the homicide charges insures that nothing will emerge in court about any links between the accused gunmen and higher-ups in the movement who might have planned and ordered the [TEXT OMITTED FROM SOURCE]

Presiding Judge Demetrios Demetriades, speaking for the three-judge panel, ruled today that not enough evidence had been produced in court to link the defendants to the incident, in which Davies and an embassy secretary were killed by shots fired through an embassy window.

The court, however, had rejected the evidence of a key prosecution witness, saying his testimony varied with statements he reportedly gave police It had also refused to allow the prosecution to present foreign television news films that reportedly implicated the defendants.

[In its investigation of the incident, the U.S. House Intelligence Committee staff determined that ABC television films made during the rioting showed three or four gunmen firing at the U.S. embassy window. Within hours after the killing, CIA officials stationed in Nicosia knew the identity of those who had fired into the embassy, according to committee sources.]

Testimony by some of the 43 witnesses who have appeared so far described Cypriot police attempts at a cover-up immediately after of the crime. At the time, EOKA-B sympathizers controlled much of the Cypriot police apparatus. Most original evidence disappered from police files before the case was reopened last summer under U.S. diplomatic pressure.

During the trial, several witnesses reported privately that attempts had been made to intimidate them. tr for add four.

The original six defendants in the case have dwindled to two. Two were acquitted, one on a technicality, and two others were sentenced to a few months in jail after pleading guilty.

The courtroom itself has been kept clear of allusions to political allegiances, although both defendants are well known locally as EOKA-B gunmen, and Ktimatias, a former police sergeant, is serving a sentence for illegal gun-possession.

The atmosphere in the three rows of public benches is overwhelmingly sympathetic to the defendants.

"It runs against the Mediterranean cultural tradition of Cyprus to convict people on a complicted charge for an essentially political offenseespecially in the climate of passionate loss at that time," an experienced observer commented.