LONDON (Reuters) - Britain's King Charles has been seen in public for the first time on Friday, waving at well-wishers and passers-by after spending a short time under observation in hospital due to side effects related to his treatment for cancer.

The 76-year-old has been undergoing treatment since he was diagnosed with an unspecified form of cancer in February last year following tests after a corrective procedure for an enlarged prostate.

Buckingham Palace said late on Thursday Charles had returned to his home Clarence House, near the palace, after his time in hospital, and his engagements for Friday would be rescheduled as a precaution.

Charles was seen on Friday morning leaving Clarence House by car, seated in the back seat with his window halfway down. A BBC video showed Charles waving at those lining the often busy street between Clarence House and Buckingham Palace.

The palace declined to give any details of the side effects but a royal source described Thursday's setback as no more than the "most minor bump in the road".

His state visit to Italy next month with wife Queen Camilla will go ahead, and no other health update is expected.

Charles' initial cancer diagnosis came as a shock less than 18 months into his reign. However, royal aides have since been upbeat about his health, and while his diary is carefully managed, he has returned to a busy schedule of work.

(Reporting by Catarina Demony; Editing by Sarah Young)