MOSCOW, May 2 (Reuters) - A Russian court has cancelled

the seizure of part of JPMorgan's ( JPM ) funds in Russia in a

lawsuit brought by state lender VTB, court documents

show.

However, the ruling only applies to funds held by JPMorgan ( JPM )

in so-called type C accounts which cannot be transferred out of

Russia, and in a current account used to pay staff and taxes.

The court had ordered the seizure of funds in JPMorgan ( JPM )

accounts after VTB sued it for $439.5 million, the amount it

says was blocked by the U.S. bank in its correspondent account

in New York when the Russian lender came under U.S. sanctions.

JPMorgan ( JPM ) said in a filing on Wednesday that the value of

claims against it and orders to freeze its assets was greater

than its available assets in Russia. It did not specify the

amount of those assets.

According to the Russian court documents, JPMorgan ( JPM ) has 243.3

billion roubles ($2.64 billion) of assets in Russia of which

most - 204.7 billion - is in type C accounts.

Foreigners who hold such accounts cannot move the money

abroad, but nor can it be seized, according to presidential

decrees.

In its latest ruling, the Russian court reversed the seizure

of the money in JPMorgan's ( JPM ) type C account and freed the bank's

Russian subsidiary to make payments of staff wages and taxes

from a separate current account.

VTB and JPMorgan ( JPM ) did not immediately respond to Reuters

requests for comment on Thursday.

($1 = 92.2600 roubles)