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UPDATE 1-S&P cuts Russia's foreign currency ratings

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MOSCOW, April 25 (Reuters) - Credit agency Standard & Poor's cut Russia's foreign currency sovereign ratings on Friday, in a move that underscores risks from President Vladimir Putin's policy of intervention in Ukraine.

The agency cut both long- and short-term foreign currency ratings, to BBB-/A-3 from BBB/A-2, a decision that pushed Russia's already battered assets further down early on Friday.

"The downgrade reflects the risk we perceive of a continuation of the large financial outflows observed in the first quarter of 2014, during which the size of Russia's financial account deficit was almost twice that of the current account surplus," the agency said in a press release.

Central bank data released earlier this month showed an estimated $63.7 billion in net capital outflows in the first three months of 2014, the same as for the whole of 2013. The World Bank has said this year's total could reach $150 billion.

Russia's seizure of Ukraine's Crimea and Moscow's continued involvement in its neighbours' affairs have resulted in sanctions and threats of harsher measures from the United States and Europe.

Russian shares, which have been on a downward trajectory this week, fell further on Friday, with the dollar-denominated RTS index down 1.6 percent and the rouble-traded MICEX losing 1.3 percent to 1,283.4 points.

The rouble, which had lost nearly 8 percent against the dollar this year, was trading 0.3 percent lower against the greenback at 35.88.

The currency was 0.4 percent down against the euro at 49.65 , which left it 0.3 percent down at 42.07 against the euro-dollar basket the central bank uses to guide the rouble's nominal exchange rate.

Putin acknowledged on Thursday that sanctions have an impact on the economy. But he said Moscow was ready to take further move against Ukraine if Kiev uses military forces in the eastern part of the country.

(Reporting by Oksana Kobzeva and Lidia Kelly; Writing by Lidia Kelly; Editing by John Stonestreet)