* Russia's rouble mixed as market adjusts to US sanctions

* Peru holds interest rates steady in surprise move

* EM currencies, stocks eye muted week

June 14 (Reuters) - Most emerging market currencies were set for weekly declines on Friday, with Central and Eastern Europe units amongst the worst hit as investors weighed the U.S. interest rate outlook, while Mexico's peso continued its slide on lingering political jitters.

The MSCI index for EM stocks edged up 0.1% as of 1205 GMT, as bourses in heavyweight India, China and Taiwan advanced, while a gauge for currencies was down 0.2%.

Both indexes were on track for a subdued week, marked by political uncertainties and soft inflation data propping up bets of a September U.S. rate cut, right ahead of the Fed's projection of just one cut this year and likely as late as December.

"With the Fed's persistence to maintain rates close to current levels over the medium term, naturally this is a negative for EM assets," said Charlie Bird, FX Trader at Verto.

"However, if U.S. data foreshadows a weakening jobs market combined with more unexpected drops in inflation, a dovish pivot from the Fed will quickly see a bid for yield in EM."

Currencies in Central Eastern Europe were set for sharp losses this week, with Hungary's forint set for its steepest weekly drop against the dollar since March 2023 and the Polish zloty since September.

The Mexican peso continued its slide, falling 1.2% ahead of the commencement of local trading.

A favourite for EM 'carry' trades, the peso has fallen over 9% from level seen at the start of the month as investors fretted over the

resounding election win

by Claudia Sheinbaum in Latin America's second largest economy.

South Africa's rand appreciated 0.4% after the African National Congress and its largest rival, the pro-business Democratic Alliance, agreed to work together in a

government of national unity

.

President Cyril Ramaphosa, the ANC leader, is expected to win a new term in office with support from the other parties in the unity government pact.

"The best case scenario for asset prices from this point is that DA gets responsibility for finance, public enterprises, and energy, and the worst case, is that their cabinet representation is merely a token one," Hasnain Malik, head of equity research at Dubai-based Tellimer Research said.

Russia's rouble was mixed in different trading markets, a day after U.S. sanctions on Moscow Exchange.

Elsewhere, the World Bank approved a $2.25 billion loan for Nigeria to help stabilise its economy following reforms and scale up support for the poor.

Peru held interest rate steady, bucking expectations of a 25-basis-point cut, while the IMF board cleared the way for Argentina to draw $800 million to help drive its economic recovery.

HIGHLIGHTS:

** Mexico's Sheinbaum backs Lopez Obrador's judicial reform, says 'nothing to worry about'

** Ghana's bondholders to re-engage government next week on debt rework

** Fitch to review Hungary, Angola's credit ratings

(Reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru; Editing by Varun H K and Toby Chopra)