* German court rejects rebellion charge
* Puigdemont to appeal any extradition attempt
* Spanish PM says respects German court (Adds comment by Puigdemont, PM, background)
BERLIN, July 12 (Reuters) - A German court ruled on Thursday that former Catalan leader Carles Puigdemont could be extradited to Spain for alleged misuse of public funds, but it rejected a request to send him back to answer a more serious charge of rebellion.
Puigdemont fled to Brussels after Spanish courts issued a warrant for his arrest over his role in Catalonia's declaration of independence last October. This was illegal under Spain's constitution, according to Spanish law.
A source in Puigdemont's legal team said the former Catalan leader would appeal a decision to extradite him from Germany on any charge. If extradited for misuse of funds, Puigdemont could not be tried for rebellion in Spain.
A spokeswoman for the Schleswig Holstein court said: "The court decided this morning that an extradition due to the accusation of misuse of public funds is permissible."
Responding to the court decision, German prosecutors said they would soon decide whether to authorise the extradition of Puigdemont, who was arrested in March while travelling through Germany.
The German court decision comes after Spain's new Socialist Prime Minister Pedro Sanchez met with the new pro-independence Catalan leader Quim Torra on Tuesday in a move aimed at easing tensions between Barcelona and Madrid.
In response to the ruling, Sanchez said he respected judicial rulings on Puigdemont, whether it was from Germany, Belgium or Spain, but he said the former leader would need to be tried in Spain for his part in the secession push.
The charge of misuse of public funds carries a maximum prison sentence of eight years while the more serious charge of rebellion, faced by many of Puigdemont's former cabinet, could put him in prison for up to 30 years.
"We have defeated the main lie given by the state. German justice denies that the Oct. 1 referendum was rebellion," Puigdemont tweeted following the court decision.
He also called the imprisonment of six former cabinet members, two NGO leaders and the previous head of the Catalan parliament, serving time while awaiting trial, "unjust" and an "embarrassment." (Reporting by Holger Hansen and Belen Carreño, Writing by Madeline Chambers and Paul Day, editing by Thomas Escritt, Gareth Jones and Jane Merriman)
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