* Russian court suspends theft sentence
* Navalny was sentenced to five years prison in July
* Opposition leader say case politically motivated
By Gabriela Baczynska
KIROV, Russia, Oct 16 (Reuters) - President Vladimir Putin'schief political opponent walked free from a Russian court onWednesday after it suspended his five-year sentence for theft,and said he could never be "hounded" out of political life.
The conviction, however, will prevent Alexei Navalny, borneto prominence nearly two years ago by the biggest protests ofPutin's 13-year rule, from seeking elected office for severalyears. He said he would appeal.
"It's clear to me that the authorities are trying by allmeans to hound me out of politics, coming up with restrictionsand fabricated cases," Navalny said, embracing his wife after atense three-hour court hearing in Kirov, 1,000 km (620 miles)northeast of Moscow.
"One thing is for sure, they will not succeed in pushing meand my allies out of political life," said Navalny, 37, whoposted a strong second-place showing against a Putin ally in aMoscow mayoral election last month.
A blogger who has campaigned online against corruption amongRussia's elite, Navalny helped lead a wave of protests stirredby allegations of fraud in a December 2011 parliamentaryelection won by Putin's ruling party.
He was convicted on July 18 of organising the theft of 16million roubles ($500,000) from a timber firm in the Kirovregion in 2009, after a trial he described as Putin's revengefor challenging the Kremlin.
But he was unexpectedly freed from custody the following dayafter thousands protested outside the Kremlin, allowing him tocontinue his mayoral campaign as he awaited his appeal hearing.
Analysts say the Kremlin was betting Navalny would suffer ahumiliating election defeat that would quash his politicalambitions and neutralise any threat to Putin, but he won 27percent and nearly forced the incumbent into a runoff.
Putin, however, remains by far Russia's most popularpolitician and the protests of last year have eased off.Navalny's popularity is more limited beyond the big cities ofwestern Russia, such as Moscow and St Petersburg.
Jailing Navalny would have increased the risk of a new waveof protests by Putin's opponents and human rights activists overwhat they see as a clampdown on dissent since the 61-year-oldpresident started a six-year third term in 2012.
It would have done more damage to Putin's image in the Westas he prepares to host the 2014 Winter Olympics in February.
Navalny and others suggested that Wednesday's ruling wascarefully tailored by the Kremlin to avoid making him into whatpolitical analyst Liliya Shevtsova called "a Russian Mandela"while sidelining him from electoral politics.
"The court decision means political isolation," prominentopposition activist Ilya Yashin, said on Twitter.
Navalny argued during the hearing that the case against himwas fabricated and politically motivated, and afterwardsuggested that the ruling was the result of careful calculationsin the Kremlin.
"It's clear that the decision on suspending the sentence wastaken not here but in Moscow," he said.
Putin denies exerting influence over the courts. Hisspokesman, Dmitry Peskov, said the president had nothing to dowith the ruling.
Navalny's lawyers and other legal experts were uncertain howlong he will be barred from elections.
The Constitutional Court ruled last week that lifetime bansfor convicts not serving life terms are unconstitutional, butthe law has not been amended and, previously, convicts had beenbarred from elections for at least the length of theirsentences.
In addition to the suspended sentence, the judge saidNavalny was sentenced to five years probation. His lawyer OlgaMikhailova said the terms would be served consecutively,indicating Navalny could be barred from elections for 10 years.
Even a five-year ban would keep Navalny, who has airedpresidential ambitions, out of the presidential vote scheduledfor 2018. Putin, who has been in power as president or primeminister since 2000, has not ruled out running in that election.
Navalny shrugged off the ban.
"Now I cannot run in elections, but that is not important,"he said at an art exhibit in Kirov inspired by politicallycharged Russian trials. "There are 1,001 ways to conductapolitical battle. Yesterday I had 1,001 - now I have 1,000."
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