UPDATE 1-Swiss announce plan to block Swiss share trades on EU exchanges

(Adds details and background)

ZURICH, Nov 30 (Reuters) - The Swiss government announced plans on Friday to ban trading of Swiss shares on European Union stock exchanges from January, in an escalating row with Brussels that could put a severe dent in cross-border stock trading.

Frustrated by a lack of progress on a new bilateral treaty, Brussels has said that as of Dec 31 it will withdraw its recognition of Swiss stock market regulations that allows EU-based investors to trade in Switzerland.

In a tit-for-tat response, the Swiss government said in June it could ban by decree trading of Swiss shares on exchanges in the EU. Around 30 percent of the volume of trade in Swiss shares is now carried out on other platforms including CBOE Europe, Turquoise and Aquis.

Finance Minister Ueli Maurer has said failure to act could make bourse trading volume collapse by 70 to 80 percent.

The ordinance it unveiled on Friday puts that plan into effect, unless the European Commission recognises Swiss regulatory equivalence by the start of next year.

"The government's aim and the best solution for all affected market players in Switzerland and abroad remains a swift and unlimited extension of stock market equivalence," it said.

Heavyweights like Nestle, Novartis, Roche , UBS and Zurich Insurance make the SIX Swiss Exchange the fourth-largest in Europe with listed companies worth around $1.6 trillion.

Trading turnover was 1.35 trillion Swiss francs ($1.35 trillion) last year.

The Swiss government ordinance requires foreign trading venues to get Swiss recognition for trading Swiss shares. EU trading venues would not qualify, but other venues like New York, Singapore or Hong Kong would.

Swiss officials hope this would encourage more trading of Swiss stocks in Switzerland.

Swiss bourse operator SIX, which welcomed the government's move, risks losing much of its exchange business if the European Union and Switzerland fail to reach a deal by the end of the year on future relations, SIX's chairman told Reuters in September. ($1 = 0.9996 Swiss francs) (Reporting by Michael Shields; Editing by John Miller)