BANGKOK, March 11 (Reuters) - A Thai court denied bail on Tuesday to alleged international arms dealer Viktor Bout, caught in a U.S. sting operation in Thailand last week, his lawyer said.

"The court rejected our request this morning, citing the severe wrongdoing he was accused of, fearing he might jump bail," Lak Nitiwatvichan told Reuters.

Bout, dubbed the "Merchant of Death" of the clandestine arms trade and picked up from a hotel last week hours after arriving from Moscow, had denied a Thai charge of "seeking or gathering assets for terrorism", police said.

Bout told the police he was in Bangkok on holiday and not to transact any weapons business, and Lak told Reuters his client was not involved with terorist groups such as al Qaeda or the Southeast Asian network linked to it, Jemaah Islamiah.

Bout, a former Soviet air force officer, was charged in New York with conspiring to sell weapons worth millions of dollars to the Revolutionary Armed Forces of Colombia, or FARC.

But Bout's lawyer said FARC were not terrorists.

"They are just rebels standing on the opposite side to the government," Lak said. The United States, which has given billions of dollars in military aid to Colombia to fight the Marxist rebels and drug cartels, plans to seek Bout's extradition.

Thai police have said that would have to wait until after he was tried in Thailand. Thai laws require detained foreign terror suspects to be tried in the country.

Police, who can detain Bout for three months, say they expect to finish their investigation in two months before submitting it to prosecutors.

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