By Joseph Ax

(Reuters) - U.S. authorities have found an apparent link between a Michigan man charged with illegally purchasing an arsenal of explosives and the radical U.S.-born al Qaeda recruiter Anwar al-Awlaki, the Detroit News reported on Saturday.

Sebastian Gregerson, 29, was arrested on Sunday after federal prosecutors say he traded a handgun to an undercover agent in exchange for several grenades.

A search of his home uncovered seven rifles, two handguns, a hatchet, 20 knives including two machetes and thousands of rounds of live ammunition, according to prosecutors.

Investigators also seized several CDs with al-Awlaki's name on them, the newspaper reported, citing sealed court records it obtained.

Al-Awlaki's English-language sermons calling for attacks on the United States influenced a number of militants. Umar Farouk Abdulmutallab, the man convicted of trying to blow up a Detroit-bound airplane on Christmas in 2009, trained under al-Awlaki. Nidal Hasan, the Army major who killed 13 people at Fort Hood in Texas in 2009, exchanged emails with al-Awlaki.

Al-Awlaki was killed by a drone strike in Yemen in 2011.

Gregerson's court-appointed defense lawyer, David Tholen, did not immediately respond to a request for comment on Saturday.

In recorded phone conversations with the undercover agent, Gregerson discussed making homemade grenades and ways to attack buildings and law enforcement by using the explosive devices, according to a criminal complaint.

During a court hearing on Thursday, Tholen argued that Gregerson should be released on bond while the charges are pending, saying prosecutors had not provided enough information about the undercover agent.

"The government is overstating its case," he said, according to a recording of the hearing.

But prosecutors told U.S. Magistrate Judge Mona Majzoub that Gregerson posed a danger to the public, and the judge agreed that he should be kept in custody until trial.

(Editing by Frank McGurty and Leslie Adler)