UPDATE 1-U.S. appeals court blocks release of HSBC money laundering report

(Adds details from decision, background, case citation)

NEW YORK, July 12 (Reuters) - A U.S. appeals court on Wednesday blocked the release of a report discussing HSBC Holdings Plc's progress in improving its controls against money laundering, reversing a judge's order that the report be made public.

The 2nd U.S. Circuit Court of Appeals in Manhattan said U.S. District Judge John Gleeson abused his discretion in finding that the public had a constitutional right of access to the report under the First Amendment.

HSBC agreed to a monitor in December 2012 when it agreed to pay a $1.92 billion fine and enter a five-year deferred prosecution agreement to resolve U.S. Department of Justice charges it had become a preferred bank for Mexican drug cartels and other money launderers, and conducted transactions barred by U.S. sanctions.

Wednesday's decision was a victory for HSBC and the Justice Department, which said releasing the report could compromise efforts to fight money laundering, including for terrorism, and discourage cooperation with law enforcement.

It was also a defeat for Hubert Dean Moore, a Pennsylvania man who was an HSBC mortgage customer before filing for bankruptcy and who sought the report's release to assess whether there were still problems in HSBC's business practices.

HSBC, the Justice Department and Moore did not immediately respond to requests for comment. Gleeson, who sat in Brooklyn, is now in private practice.

The case is U.S. et al v. Moore, 2nd U.S. Court of Appeals, No. 16-308. (Reporting by Jonathan Stempel in New York; Editing by Bernadette Baum and Jonathan Oatis)