UPDATE 2-Sulzer says freed of Russia-related U.S. sanctions, shares soar

* U.S. authorities clear buyback that cuts Renova stake below half

* Sulzer sees scant impact on long-term performance

* Shares jump 15 percent in early trade (Adds market reaction)

ZURICH, April 12 (Reuters) - Swiss pumpmaker Sulzer is free of U.S. sanctions after authorities approved its buyback of shares that has reduced Russian oligarch Viktor Vekselberg's stake to less than 50 percent, it said on Thursday.

Its stock, which had tumbled by a fifth on the sanctions news, rebounded 15 percent in early trading.

"Sulzer confirms that it is no longer a blocked party or subject to sanctions under U.S. law," it said in a statement.

"The company can now resume normal operations globally. To the extent that its assets have been blocked, Sulzer is taking the necessary steps to achieve timely reversal," it added.

The Baader Helvea brokerage called the step "a big relief" and said attention would now turn to first-quarter order intake figures next week which it expected to show a strong start to the year given a broadening recovery in the oil and gas sector.

Sulzer's U.S. bank accounts were frozen for certain transactions after sanctions were levied last week against Vekselberg and other oligarchs close to Russian President Vladimir Putin as punishment for alleged Russian meddling in the 2016 U.S. election and other "malign activity".

The U.S. measures had prompted big Swiss banks to stop trading its securities and raised the threat that Sulzer shares could be removed from major indices.

Sulzer said the U.S. Department of the Treasury's Office of Foreign Assets Control had on Wednesday authorised its plan to buy back shares from Vekselberg's Renova investment vehicle.

"This share transfer has been completed and Renova is now a minority shareholder, holding 48.83 percent of the shares in Sulzer. Sulzer now holds 15.24 percent of its own shares," it added.

"The business activities of Sulzer have been considerably disrupted, but the company does not believe that its long-term performance will be affected," it said. (Reporting by Michael Shields Editing by Brenna Hughes Neghaiwi and Keith Weir)