* Putin says Snowden in transit area at airport, free to go
* Russia and China dismiss U.S. criticism
* U.S. says Russia has clear legal basis to expel Snowden
* White House says China relations have been damaged
Russian President Vladimir Putin confirmed on Tuesday a former U.S. spy agency contractor sought by the United States was in the transit area of a Moscow airport but ruled out handing him to Washington, dismissing U.S. criticisms as "ravings and rubbish".
In his first public comments since Edward Snowden flew in on Sunday, Putin appeared to make light of the diplomatic uproar over the fugitive, whose flight from U.S. authorities is becoming a growing embarrassment for President Barack Obama. Asked by a journalist about the affair, he smiled fleetingly.
"I myself would prefer not to deal with these issues. It's like shearing a piglet: there's a lot of squealing, but there's little wool," Putin told a news conference in Finland.
Snowden, who worked as a systems administrator at a U.S. National Security Agency facility in Hawaii, is facing espionage charges from the United States after leaking details about secret U.S. surveillance programs to the news media.
Two U.S. national security sources said intelligence agencies have detected that members of targeted militant organizations, including both Sunni and Shi'ite Islamist groups, have begun altering communications patterns, believed to be in response to the leaks on eavesdropping programs.
NSA Director Keith Alexander sought to reassure his employees that the outcry over surveillance programs leaked by Snowden was not directed at them and that agency leaders would "take the heat."
Putin's refusal to hand back Snowden risked deepening a rift with the United States that has also drawn in China and threatens relations between countries that may be essential in settling global conflicts including the Syrian war.
Republican lawmakers in Washington seized on the Snowden saga to portray Obama as an ineffective foreign leader.
Washington has gone to great lengths to try to ensure that Snowden has nowhere to go to seek refuge. But Putin said Russia had no extradition treaty with the United States and suggested that Moscow would expel Snowden only if he were a criminal.
"He has not crossed the state's border, and therefore does not need a visa. And any accusations against Russia (of aiding him) are ravings and rubbish," Putin said in an appearance with Finnish President Sauli Niinisto.
Shortly after Putin's comments, the White House said Moscow had a "clear legal basis" to expel Snowden because of his revoked passport and the outstanding charges against him.
"Accordingly, we are asking the Russian government to take action to expel Mr. Snowden without delay and to build upon the strong law enforcement cooperation we have had, particularly since the Boston Marathon bombing," said White House National Security Council spokeswoman Caitlin Hayden.
She said the United States agreed with Putin's comment in Finland that it did not want the incident to negatively affect U.S.-Russia relations, but members of the U.S. Congress denounced Putin's stance and said it would have an impact.
"It should cause a profound reevaluation on our relationship with Russia and with Vladimir Putin, something that a lot of us have been saying for a long time," said Senator John McCain, the 2008 Republican presidential contender.
Hours earlier, U.S. Secretary of State John Kerry had cautiously questioned the Russian approach.
"It is accurate there is not an extradition treaty between Russia and the United States, but there are standards of behaviour between sovereign nations," Kerry said, in Jeddah.
Republican critics of the president said the Snowden furore was a sign of Obama's weakness and declining international stature, and Russia was taking advantage of the United States.
"They know that he's weak. They know that he's so fearful about getting involved in balance-of-power foreign affairs and they're playing on it, and they're enjoying it very, very much," said Republican Senator Orrin Hatch of Utah.
Snowden has applied for asylum in Ecuador but Quito is still considering his application and the United States is trying to persuade the governments of countries where he might go to hand him over. His plans remain unclear.
Ricardo Patino, Ecuador's foreign minister, said during a visit to Vietnam that he had asked U.S. authorities to provide written communication to analyse alongside Snowden's request.
FREE TO LEAVE
Putin said the 30-year-old Snowden was in the transit area of Moscow's Sheremetyevo airport and, not having gone through passport control, was free to leave.
"The sooner he chooses his final destination, the better it would be for us and for himself," Putin said.
Russian law requires travellers who spend more than 24 hours in the airport's transit area - as Snowden has done - to get a transit visa. It was unclear whether Snowden had sought or received a transit visa.
There has been speculation in the Russian media that Snowden may be talking to the FSB, the Russian security service, and could be involved in a prisoner swap. Putin said Russian security agencies "never worked with ... Snowden and are not working with him today".
The U.S. State Department said diplomats and Justice Department officials were talking to Russia, suggesting they sought a deal to secure his return to face espionage charges.
Snowden left Hong Kong for Moscow on Sunday, and the WikiLeaks anti-secrecy group said he was headed for Ecuador and is travelling on a refugee document of passage provided by Ecuador.
Journalists camped out at the airport have not spotted him inside, or leaving, the transit area. He has not registered at a hotel in the transit zone, hotel sources say.
U.S. officials admonished Beijing and Moscow on Monday for allowing Snowden to escape their clutches but the United States' partners on the U.N. Security Council, already at odds with Washington over the conflict in Syria, hit back.
"The United States' criticism of China's central government is baseless. China absolutely cannot accept it," Foreign Ministry spokeswoman Hua Chunying said in Beijing, also dismissing U.S. criticism of Hong Kong, a Chinese territory, for letting Snowden leave.
Putin also praised WikiLeaks founder Julian Assange, who himself is a fugitive from U.S. justice, and questioned whether he or Snowden should be treated as criminals.
"Ask yourself: should such people be handed over to be imprisoned or not?" said Putin, who last week was smarting at being isolated over Syria at a summit of the G8 industrial powers and sees Washington as an overzealous global policeman.
Advisers to Assange declined to comment on the situation.
Fallout from a protracted wrangle over Snowden could be far-reaching, as Russia, the United States and China hold veto powers at the U.N. Security Council and their broad agreement could be vital to any settlement in Syria.
International mediator Lakhdar Brahimi said he was pessimistic an international conference on Syria could take place in July as hoped and urged Russia and the United States to help contain a conflict which has killed almost 100,000 people.
Talks between the United States and Russia to set up a Syrian peace conference produced no deal on Tuesday, with the powers on either side of the two-year civil war failing to agree when it should be held or who would be invited.