The Russian rouble weakened in Moscow trade on Wednesday, lacking momentum but retaining support from capital controls, while stock indexes inched higher after the central bank lifted a ban on short selling of securities.

At 0734 GMT, the rouble was 0.2% weaker against the dollar at 61.60 after swinging in a wide range of 55.80-67.50 over the past week.

Against the euro, the rouble shed 2% to 63.65 , hovering not far from a near seven-year high of 57.10 it touched last week.

The rouble became the world's best-performing currency  so far this year, boosted artificially by capital controls that Russia imposed after starting what it calls a "special military operation" in Ukraine on Feb. 24.

New gas payment terms for EU consumers that require conversion of foreign currency into roubles and a fall in imports have also supported the Russian currency.

But the rouble could come under renewed pressure from large state spending at home together with the latest European sanctions that envisage an embargo on Russian crude oil imports that will take full effect by end-2022.

"Military conflicts are expensive, currencies have always experienced devaluation because of that," said Timur Turlov, CEO of Freedom Holding Corp who is now planning to detach the Russian business Freedom Finance from the U.S. listed holding company.

Russia needs huge financial resources for its military operation in Ukraine, Finance Minister Anton Siluanov said last week, putting the amount of budget stimulus for the economy at 8 trillion roubles ($130.29 billion)

"I don't see efficient balancing poles, either for restraining rouble appreciation or for preventing its weakening," Turlov said, adding that fundamentally the rouble rate could have been weaker than 100 per dollar today if not for capital controls.

On the stock market, the dollar-denominated RTS index was up 0.4% to 1,212.6 points. The rouble-based MOEX rose 0.6% to 2,370.8 points as the central bank allowed short-selling, gradually easing restrictions imposed after Feb. 24.

The lifting of the ban on short positions will add to market volatility, said Alexei Antonov from Alor Brokerage, adding that the MOEX index was likely to stay within a range of 2,200-2,500 for now.

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($1 = 61.4000 roubles) (Reporting by Reuters Editing by Gareth Jones)