BANGKOK (AFP) - A Thai court on Tuesday denied bail to arms dealer Viktor Bout, worried the man known as the "Merchant of Death" for allegedly trafficking weapons around the world would skip the country.

Bout was arrested last week in an elaborate sting operation by Thai police and U.S. agents, and held on charges of conspiring to provide arms to Colombian rebels. He is incarcerated at a maximum security prison in Bangkok.

"The suspect is accused of being involved in international terrorism," said a statement from the criminal court seen by AFP. "This is a serious case and he may leave the country, so the court is not allowing bail for the suspect."

Lak Nitiwatvichan, Bout's Thai lawyer, insisted that his client was innocent and had not broken the law in any country.

"We had put 500,000 baht cash ($16,000) up for bail, the court denied the request," he said. "We will prove that he is not involved with any group, any gang like Al-Qaeda and (extremist organisation) Jemaah Islamiyah."

Bout's co-defendant has been detained after a court appearance in New York. Andrew Smulian appeared in Manhattan district court late Monday on charges of conspiracy to provide material support or resources to a designated foreign terrorist organization and was detained without bail. Prosecutors did not say where or when Smulian was arrested.

Over the years, Bout, 41, is said to have supplied arms to Afghanistan's hardline Taliban militia, Osama bin Laden's Al-Qaeda terror network, Marxist rebels in South America and former Liberian leader Charles Taylor.

He was finally caught after a 12-month undercover operation in which U.S. drug enforcement agents infiltrated Bout's inner circle posing as Marxist Colombian rebels seeking an arsenal of weapons.

Bout, who was arrested on a warrant charging him with procuring assets for terrorists, was not present at the bail hearing.

Lak said the former Soviet air force officer had no intention of trying to flee Thailand, and said that he would appeal the court's denial of bail in the coming days.

Bout can be held in jail in Thailand for 84 days without charge. Thai police are now scrambling to come up with evidence to try him in the kingdom.

If they cannot come up with a case, U.S. officials have said they are determined to extradite him on charges of conspiring to sell millions of dollars in weapons to Colombian FARC rebels.

Michael Turner, a spokesman with the U.S. embassy in Bangkok, told AFP on Tuesday that they intended to extradite Bout, but he said the legal process could take months.

"If (a trial) does happen in Thailand, that is a separate issue, but we want Mr Bout to go to the United States, so we've begun the extradition process," he said.

Russia has also hinted that it plans to seek Bout's extradition, but Lak said that so far he had received no formal requests.

"And even if some country asks, they have to wait until the legal process in Thailand is over," he told reporters. "He (Bout) wants to fight the case in Thailand."

Bout is said to be the inspiration for the ruthless arms dealer played by Nicholas Cage in the film Lord of War.