* EU proposes ban on Russian oil sales
* RUB at around 2-yea high as capital controls help
* EM stocks index down for third straight session
* Fed decision due at 1800 GMT
By Susan Mathew
May 4 (Reuters) - Emerging markets currencies were in an uneasy holding pattern and stocks fell for a third straight session on Wednesday, as investors keenly awaited the U.S. Federal Reserve's policy decision and clues about the path ahead.
Further curbing risk appetite, the European Union proposed a phased oil embargo on Russia in its sixth sanctions package over Moscow's attack on Ukraine. The proposal also included sanctions on Russia's top bank and banning its broadcasters from European airwaves.
But Russia's rouble jumped to around two-year highs against both the dollar and the euro, supported by strong capital controls. The offshore rouble was at around 67 to the dollar, while in Moscow it was at around 70. Russia's stock benchmark fell 2%.
"Although the rouble's return to pre-war levels may not mean as much as it did before, in the context of the current sanctions and capital controls, this signals that Russia is coping with the situation better than the West would have hoped," Rabobank said in a note.
Data on Wednesday showed Russian manufacturing activity shrank for the third month running in April, though at a slower pace than in the previous month.
More broadly, MSCI's index of developing world shares fell 0.4% with hefty falls in Hong Kong tech shares dragging the index.
Spreads of hard currency emerging market bonds over safe haven U.S. Treasuries widened again, now at 447 basis points (bps), their widest in over a month despite U.S. yields easing a touch.
The Fed is seen raising rates by 50 bps and keeping the door open for more hikes as it tries to combat surging inflation. While most emerging market central banks have also been hiking rates, rising U.S. rates reduce the appeal of riskier high-yielding assets.
Markets experts also warn of the likely impact to economic growth from monetary policy tightening. With more sanctions against Russian oil spurring global crude prices, oil importing countries such as India, the Philippines and Turkey face more pain.
As the euro steadied, central and eastern European currencies gained, with the Polish zloty rising 0.3%.
"We think Poland's fundamentals are solid enough for the zloty to withstand current challenges. A fading of risks, together with Poland's hawkish monetary policy, should support the zloty," said Tilmann Kolb, an analyst with UBS Global Wealth Management.