The extended arm gesture, sure to offend families of the 77 killed in 2011, earned Breivik a reprimand from Judge Oystein Hermansen, who described it as "offensive to the dignity of the court" and "disturbing."
Wearing a dark suit, with a shaved head and thick brown beard with a touch of grey, Breivik, 37, appeared more haggard than during his last court appearance in April.
He agreed not to repeat the salute.
The legal defeat stunned the Norwegian state, which has prided itself on scrupulously respecting the rule of law after the bloodiest attack on its soil since the end of World War II.
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In prison, Breivik has a three-cell complex where he can play video games and watch television on two sets. He also has a computer without internet access, gym machines, books and newspapers.
Earlier that day, he killed eight people with a bomb he detonated at the foot of government building in Oslo.
In the lower court's ruling, the judge had pointed to Breivik's prolonged isolation -- he has been held apart from other inmates for five-and-a-half years for security reasons -- and a lack of measures to compensate for the severe regime.
The lower court ruling also questioned the many potentially "humiliating" strip searches, the systematic use of handcuffs, and frequent awakenings at night, especially in the early days of his imprisonment.
"The prohibition of inhumane and degrading treatment represents a fundamental value in a democratic society ... (and) applies no matter what, (even) in the treatment of terrorists and killers," judge Helen Andenaes Sekulic wrote in her verdict.
The three appeals court judges are also to rule on another point raised by Breivik himself.
In April, the lower court ruled the state was within its rights to closely monitor and filter the prisoner's correspondence to prevent him from forming a network capable of carrying out new attacks.
Breivik claims this violates his right to privacy, as guaranteed by Article 8 of the European Convention.
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