A Russian court has temporarily released protest leader Alexei Navalny from custody, but placed him under travel restrictions while he awaits the outcome of an appeal against his five-year jail sentence.

The court ruled on Friday that keeping Navalny in custody would deprive him of his right to stand in mayoral elections in Moscow on September 8.

Prosecutors had unexpectedly asked for Navalny, one of President Vladimir Putin's biggest critics, to be allowed to await the appeal decision at home in Moscow after his conviction on theft charges in the city of Kirov.

The move could be intended to appease opposition activists who protested in their thousands against the verdict in several cities on Thursday, and to head off the danger of social unrest.

Supporters of the 37-year-old anti-corruption campaigner marched on a local prison following the ruling in Russia's northern Kirov region that found Navalny guilty of stealing $500,000 from a state timber company.

Police arrested at least two protesters in a standoff.

"I am very grateful to all the people who supported us, all the people who went to [protest in Moscow's] Manezh Square and other squares," Navalny said on Friday, rushing across the court to hug his wife after he was released from a glass courtroom cage.

"We understand perfectly well what has happened now. It's an absolutely unique phenomenon in Russian justice," he said in the court in Kirov, an industrial city 900km northeast of Moscow.

'A disturbing trend'

The Kremlin has not responded to calls for comment on the verdict and said nothing about Friday's ruling.

The United States and European Union voiced concern over Navalny's conviction, saying it raised questions about the rule of law and Russia's treatment of Putin's opponents. The White House called it part of a "disturbing trend aimed at suppressing dissent."

Navalny, who emerged as a prominent opposition leader last year during anti-Putin protests, had planned to run as a candidate to be Moscow mayor in September against Sergei Sobyanin, a Putin favourite.

If the sentence stood, it could bar also bar him from running in the 2018 presidential election, in which Putin, Russia's dominant leader for 13 years, could try to extend his rule until 2024.

Navalny kept a low profile in the days before the trial verdict, which follows the handing down of a posthumous guilty verdict for whistleblower Sergei Magnitsky by a Russian court earlier this month.

Magnitsky died during pre-trial detention after accusing interior ministry officials of corruption.

Source: Agencies