(Adds court lifting restrictions on shares, background)
MOSCOW, Dec 26 (Reuters) - A Russian court approved a settlement between the Sistema conglomerate and Russia's largest oil producer Rosneft on Tuesday, ending their dispute over the Bashneft oil company, RIA news agency said.
The legal nod was the last step needed to seal the deal and draw a line under a confrontation that rattled investors.
Under the pact announced by the companies on Friday, Sistema agreed to pay Bashneft 100 billion roubles ($1.7 billion) by March 30, 2018.
Sistema, which groups the assets of Russian businessman Vladimir Yevtushenkov, was also allowed to access assets frozen during the dispute. The group said on Tuesday bailiffs had lifted restrictions on its access to dividends from its 31.76-percent-stake in MTS, Russia's largest mobile operator.
Blocks on other assets would be released gradually as Sistema made the payment in three installments, Interfax news agency said.
The payments of 20 billion, 40 billion and 40 billion roubles were due on Dec. 29, Feb. 28, and March 30, Interfax news agency cited the judge as saying.
The dispute centered on mid-sized oil company Bashneft and pitted powerful Rosneft chief executive Igor Sechin, a close ally of President Vladimir Putin, against Yevtushenkov, a billionaire who some media reports suggest is close to Prime Minister Dmitry Medvedev.
The Russian government seized Sistema's stake in Bashneft in 2014, saying its privatization had been illegal. Rosneft later bought a controlling stake in Bashneft and in May filed its first lawsuit, alleging Sistema had removed assets from the company - something Sistema denies.
In a second claim, Rosneft had also sought the return of dividends paid out by Bashneft between 2009 and 2014, when Sistema was its controlling shareholder.
The legal claims made against Sistema by Russia's top oil producer totalled $4.5 billion, prompting Sistema to retaliate against Rosneft by filing a $5.6 billion lawsuit.
($1 = 57.7140 roubles) (Writing by Polina Ivanova; Editing by Robin Pomeroy and Andrew Heavens)