* Judge says case is political, rejects U.S. request
* U.S. "disappointed and mystified" by ruling
* Russia Foreign Ministry welcomes verdict
(Adds Russian reaction)
By Kittipong Soonprasert
BANGKOK, August 11 (Reuters) - A Thai court on Tuesday refused to extradite alleged Russian arms dealer Viktor Bout to the United States to face trial on charges of supplying weapons to Colombian rebels.
The U.S. wanted to try Bout, dubbed the "Merchant of Death", for conspiracy to sell millions of dollars of weapons to rebels from the Revolutionary Armed Forces of Colombia (FARC), which it said could be used to kill Americans.
"The U.S. charges are not applicable under Thai law. This is a political case," said judge Jittakorn Wattanasin in delivering the verdict at Bangkok's Criminal Court.
"The FARC is fighting for a political cause and is not a criminal gang. Thailand does not recognise the FARC as a terrorist group."
Bout was arrested in a Thai-U.S. sting operation at a Bangkok hotel in March 2008 after arriving from Moscow.
Dressed in washed-out orange prison fatigues, Bout, 42, smiled as the judged read the ruling and made a "V" sign to signal victory as he left the court. Thai prosecutors have 72 hours in which to appeal against the decision.
"We're disappointed and mystified by the lower court ruling," said James Entwistle, deputy chief of mission at the U.S. embassy in Thailand.
"We will consult the Thai government. We understand they want to file a petition and we support that."
The case has forced the country into a legal and diplomatic tug-of-war between long-time ally the United States, and Russia, with which relations have warmed in recent years.
Bout's wife, Alla, commended the judge for making a ruling based on facts rather than diplomatic ties.
"I am very happy as the U.S. government has strong political influence in Thailand," she told reporters. "The judge showed professionalism in this case."
Russia's Foreign Ministry welcomed the decision and looked forward to his early release, Interfax news agency reported.
"We view this decision with satisfaction and we hope that in the nearest future, Viktor Bout will return to the motherland," Interfax quoted a ministry spokesman as saying.
U.S. prosecutors alleged Bout had been trafficking arms since the 1990s, using a fleet of cargo planes to send weapons to Africa, South America and the Middle East.
According to the U.S. indictment, Bout had told agents he could supply them with 700 to 800 surface-to-air missiles, 5,000 AK-47 assault rifles, millions of rounds of ammunition, C-4 explosives, land mines and unmanned aerial vehicles.
The U.S. had hoped to try him on four separate charges, three of which could land him in prison for life if found guilty.
Bout is alleged to have sold or brokered arms deals that have helped fuel wars in Afghanistan, Angola, the Democratic Republic of Congo, Liberia, Rwanda, Sierra Leone and Sudan.
The character played by Nicholas Cage in the 2005 movie "Lord of War" is loosely based on the Russian's alleged exploits. A British minister labelled him "a merchant of death".
He has denied involvement in the illegal arms trade and has maintained he was only involved in cargo transportation. (Writing by Martin Petty; additional reporting by Conor Sweeney in Moscow; Editing by Sophie Hares)