Rangoon, Burma - A court rejected an appeal by Burmese democracy leader Aung San Suu Kyi for her release from house arrest, another reminder that the country's military junta treads warily when considering concessions to the opposition or improving relations with the West.

Suu Kyi's lawyer, Nyan Win, said the Yangon Division court upheld her August conviction for briefly sheltering an uninvited American at her home earlier this year, in a verdict that drew international condemnation. Her 18-month sentence ensured that she would not be able to participate in elections scheduled for next year.

He said Suu Kyi's legal team would file a new appeal to the Supreme Court within 60 days, and that Friday's proceedings had opened a new possibility for the defense's legal arguments. Suu Kyi was not allowed to attend the appeals hearing.

The ruling had been expected; the country's courts almost always follow the same hard line toward Suu Kyi and the country's democracy movement taken by the military government, which often accuses the opposition of collaborating with Burma's enemies to destroy the nation.

But Friday's court action came amid a tentative change in the political winds, after the United States announced last week that it was modifying its tough policy of isolating the military regime, and would instead try to engage it through high-level talks.

The U.S. said it will not give up its political and economic sanctions against the regime. It and other Western nations apply sanctions because of Burma's poor human rights record and its failure to turn over power to Suu Kyi's party after it won the last elections in 1990.

At the same time, Suu Kyi, 64, has made what appears to be a confidence-building gesture toward the junta, suggesting last week in a letter to top leader Senior Gen. Than Shwe that she is willing to cooperate with it to have the sanctions lifted, according to a statement from her National League for Democracy party.

She had previously welcomed sanctions as a way to pressure the junta to achieve political reconciliation with the pro-democracy movement. The movement has insisted on concessions from the government if they are to work together, particularly the freeing of political prisoners and the reopening of party offices around the country.

Speaking to the U.N. General Assembly on Monday, prime minister, Gen. Thein Sein declared that "sanctions are being employed as a political tool against Myanmar and we consider them unjust."

"Democracy cannot be imposed from the outside and a system suitable for Myanmar can only be born out of Myanmar society," he said.

However, even erstwhile allies of the junta have been calling on the generals to bend.

Myanmar's top ally, China, on Friday was one of 47 members of the U.N. Human Rights Council in Geneva that unanimously adopted a resolution demanding release  of all political prisoners -- including Suu Kyi -- and allow them to take part in next year's elections.

Suu Kyi had been convicted by a district court on Aug. 11 and sentenced to three years in prison with hard labor after American John Yettaw secretly swam to her home. The sentence was commuted to 18 months of house arrest by Than Shwe.

Yettaw has said he wanted to warn Suu Kyi he had a "vision" that she would be assassinated. He was sentenced to seven years in prison but released on humanitarian grounds and deported less than a week after the verdict.

Lawyer Nyan Win said the court on Friday accepted the argument of Suu Kyi's lawyers that the military-abolished 1974 constitution under which Suu Kyi was charged was null and void. However, it said a 1975 security law -- based on some clauses of the 1974 constitution -- under which she has been held under house arrest remained in force.

"I think there is a window open over there. They have opened a window," Nyan Win said.

Security was tight for Friday's ruling, with riot police ringing the court house, but there were no disturbances.