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UPDATE 1-South African court rules Old Mutual CEO dismissal unlawful

(Adds shares falling, more details)

JOHANNESBURG, July 30 (Reuters) - Shares in South Africa's Old Mutual fell on Tuesday after a High Court judge ruled that the company's suspension and subsequent dismissal of CEO Peter Moyo earlier this year was unlawful and that he must be temporarily reinstated.

The judge also blocked South Africa's No.2 insurer, which suspended Moyo in May and fired him in June following a disagreement over an alleged conflict of interest, from taking any steps to replace the CEO while a fuller case against his dismissal was heard.

Old Mutual shares were down more than 5% at 1340 GMT.

"The suspension and subsequent dismissal were unlawful," Judge Brian Mashile's judgement, which was read out by another judge, said. Moyo punched the air in celebration on hearing the ruling.

The saga over Moyo's dismissal has proved a reputational headache for one of South Africa's oldest companies, and one that could prove costly if Moyo's broader case is successful.

An Old Mutual spokeswoman said the company was studying the judgement and will decide on a course of action.

Moyo wants to be permanently reinstated or receive unspecified damages from the insurer, as well as see its board members declared delinquent.

In court papers, he has accused Old Mutual Chairman Trevor Manuel and other members of the board of their own governance breaches.

He argues his effort to raise concerns about this were the real reason for his suspension and dismissal, with Manuel on a campaign to turn other board members against him.

An answering affidavit filed on behalf of Old Mutual said Moyo's account of events had no factual basis, it had not breached any part of its contract with the former CEO and that there were no grounds for his reinstatement.

The affidavit said the insurer was also considering whether to claw back any part of the 35.5 million rand ($2.50 million)already paid to Moyo as part of his remuneration.

He is currently set to be paid another 4 million rand in fixed pay for his six-month notice period.

($1 = 14.1883 rand) (Reporting by Emma Rumney; Editing by Susan Fenton and Kirsten Donovan)