UPDATE 1-US court grants Fed stay in bailout disclosure case

(Adds details, background)

WASHINGTON Oct 6 (Reuters) - A U.S. appeals court on Tuesday granted the Federal Reserve's request for a stay of a ruling that would have forced the U.S. central bank to release the names of banks that participated in its emergency lending programs.

The U.S. Court of Appeals for the Second Circuit granted the stay of a lower court ruling in August that ordered the release of the data sought by Bloomberg News under a Freedom of Information Act request, according to Justice Department spokesman Charles Miller.

The Fed last week said it was appealing the lower court decision and requested a stay arguing that releasing the information could stigmatize participating financial institutions and threaten to undermine the U.S. economy which is trying to recover from the worst recession since the Great Depression.

The Fed in late 2007 launched programs designed to help financial institutions weather the economic crisis, thaw frozen credit markets and prevent a meltdown of the global financial system.

Arguments before the appeals court in New York are set for Jan. 4, 2010, Miller said.

The case is: Bloomberg LP v. Board of Governors of the Federal Reserve System, U.S. District Court, Southern District of New York (Manhattan), No. 08-9595. (Reporting by Jeremy Pelofsky; Editing by Theodore d'Afflisio)