By Ankika Biswas

June 13 (Reuters) -Russian assets slumped on Thursday after new U.S. sanctions against the country, and Pakistani equities soared after the annual federal budget, while emerging markets stocks index hit a two-week high on cheer around soft U.S. inflation data.

The Moscow Exchange MOEX.MM shed 6%, on track for its steepest one-day drop since October 2022, after new U.S. sanctions forced an immediate suspension of trading in dollars and euros on the leading financial marketplace. The move means banks, companies and investors will no longer be able to trade either currency via a central exchange.

Washington announced a new round of sanctions aimed at cutting the flow of money and goods to sustain Russia's war in Ukraine.

The dollar-denominated RTS stocks index .IRTS and the rouble-based MOEX .IMOEX fell over 1% each.

The rouble RUBUTSTN=MCX dropped to a near three-week low against the dollar on the interbank market amid low liquidity and strengthened to a near one-year high against the yuan.

"These sanctions are certainly nothing new and their impact on Russian assets, including the rouble, are nowhere near as significant as they would have been prior to the war. We see the impact on the Russian economy as effectively negligible," said Matthew Ryan, head of market strategy at Ebury.

Pakistan's main stock index .KSE climbed 4%, eyeing its biggest one-day jump in nearly a year, a day after the government's annual federal budget that included an ambitious tax revenue target aimed to strengthen the case for a new International Monetary Fund bailout deal.

The South African rand ZAR=D3 strengthened against the dollar as government of national unity (GNU) talks progressed. The Inkatha Freedom Party (IFP) will join the African National Congress and the Democratic Alliance, as parties race for a deal before the newly elected parliament sits on Friday.

Meanwhile, the index for EM stocks .MSCIEF rose 0.8%, along with a 0.1% rise in the currencies gauge .MIEM00000CUS.

Investors seemed to continue cheering a soft U.S. inflation report that has kept the dollar index =USD on a soft footing, even when the Fed pushed out the start of rate cuts to perhaps as late as December.

"I think markets are taking the view that it wouldn't take much for the balance to shift towards two cuts... Futures pricing show markets are still largely pricing in two cuts that might largely be behind this lack of a selloff in emerging market assets following the announcement," Ebury's Ryan noted.

Elsewhere, Argentina's Senate passed a sprawling bill that is key to libertarian President Javier Milei's economic reform plans. Protesters set fires and clashed with police in the streets outside Congress.

HIGHLIGHTS:

** IMF approves second review of Sri Lanka's $2.9 bln bailout, warns of economic risks

** Bank of Mexico says it could act to restore 'order' in markets

** Hong Kong keeps key rate steady, tracking Fed move

Reporting by Ankika Biswas; Editing by Eileen Soreng

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