A Moscow court on Tuesday denied bail to a US former Marine who was arrested in Russia on espionage charges last month.

Paul Whelan, 48, was taken into custody on December 28 by the Russian FSB security service, who said he was caught "while carrying out an act of espionage".

"The appeal of the defence (for bail) is not approved," Judge Dmitry Pronyakin of Lefortovo court told Whelan, who was following proceedings through an interpreter.

Wearing a blue shirt and dark trousers, Whelan appeared in a glass cage at the hearing, as is usual for suspects in custody in Russia.

Ahead of the hearing, lawyer Vladimir Zherebenkov said he did not expect his client to be released.

"In Russia as a rule people are kept in custody," Zherebenkov told reporters outside the court building.

Analysts have speculated that Whelan was arrested to pave the way for a possible spy swap with a Russian agent arrested abroad, possibly Maria Butina.

Butina is a gun rights campaigner who was convicted of being a "foreign agent" in the United States last month and likely faces six months in jail.

Moscow has rejected the idea Whelan could be exchanged for any US prisoner, saying it does not treat people as "pawns" in diplomatic games.

Zherebenkov said he expected any trial to last for at least half a year and that there could be no talk of any exchange until it was completed.

"I saw him last week... he feels well, he has a sense of dignity," the lawyer added.

A spokeswoman for the US embassy in Moscow told Russian media it was "closely following" the case.

We "continue to urge Russia to follow international law and provide a quick, fair and transparent trial," Andrea Kalan said.

The US ambassador to Russia, Jon Huntsman, has visited Whelan at Moscow's Lefortovo prison.

Whelan's family said he was in Moscow for a friend's wedding and US security experts have raised doubts over whether he was a spy.

Whelan also holds British, Irish and Canadian passports but his family said in a statement Monday that the UK and Canadian governments had been denied consular access.

The New York Times has reported that the Marine Corps court-martialed Whelan in 2008 on charges of larceny and passing bad checques, an offence that in most cases disqualifies candidates from foreign intelligence work.

Espionage is punishable in Russia by up to 20 years in jail.

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