(Reuters) - A Myanmar court on Tuesday jailed a New Zealand bar manager and twoMyanmar colleagues for two and a half years for insulting religion by using a psychedelic image of Buddha wearing headphones to promote their bar.

The case comes amid a surge in Buddhist nationalism in Myanmar - which emerged in 2011 from half a century of military rule - with monks forming groups aimed at promoting the country's Buddhist character.

New Zealander Phil Blackwood and bar manager Htut Ko Ko Lwin and bar owner Tun Thurein had all pleaded not guilty. They were sentenced to jail with labour, the court said.

Rights groups condemned the verdict as an assault on freedom of expression and called for the release of the three.

"The authorities are clearly trying to make an example with this case, but ironically all it has done is hurt the image of Myanmar and Buddhism," said Matt Smith, executive director of the Bangkok-based group Fortify Rights.

Police bundled Blackwood out of court into a vehicle after the verdict and he did not comment to reporters.

Some people have compared the case with recent remarks made by a prominent monk and Buddhist nationalist, Wirathu, who called a U.N. human rights envoy a "whore".

A senior monk and an official in the Religious Affairs Ministry told Reuters in January that Wirathu's remark could harm Buddhism. He has not been charged.

At a hearing in December, Blackwood said he had not intended to offend Buddhism when he posted the image on the bar's Facebook page to advertise a cheap drinks night.

He said he had removed the image and posted an apology when he realised it was being shared online and provoking outrage.

"These men expressed contrition for what they said was a mistake, but meanwhile extremists like Wirathu have incited violence in the name of Buddhism and publicly attacked a senior U.N. official with truly offensive remarks," Smith said.

Myanmar's semi-civilian government has lifted restrictions on freedom of speech, association and media, but reforms have been accompanied by a rise in Buddhist nationalism.

The main target of the nationalist movement has been Muslims, who make up about 5 percent of Myanmar's 53 million people. Sectarian violence since June 2012 has killed at least 240 people, most of them Muslims.

Parliament is due to debate laws, including regulations on religious conversions and interfaith marriages, which were initially proposed by a Committee to Protect Race and Religion, one of the main Buddhist nationalist groups associated with Wirathu.