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UPDATE 2-Swiss exchanges to lose access to EU investors from July

Francesco Guarascio

* EU moves to push Swiss bourses out of market by June 30

* Swiss have vowed to impose retaliatory measures

* Fight escalates as EU faces similar concerns posed by Brexit

* Market disruption likely but share trading could partly continue (Adds market reaction, background)

BRUSSELS, June 21 (Reuters) - Swiss exchanges will lose direct access to European Union investors from July 1 in a potential blow to Switzerland's financial industry after the bloc lost patience in talks on a stalled partnership treaty.

The European Commission will not propose extending the equivalence regime that lets EU investors trade on Swiss bourses, effectively ending it as of July 1, an EU diplomat told Reuters on Friday.

Friday was the deadline for the Commission to make such a proposal, but it will refrain from doing so because Bern did not endorse a partnership treaty with the EU that had been under negotiation for years, the diplomat said.

The blue-chip Swiss Market Index was down 0.4% by 1435 GMT but off session lows.

Bern's request this month for "clarifications" on three areas - protecting wages, regulating state aid and defining the rights of EU citizens in Switzerland -- are seen in Brussels as demands to reopen the treaty text, which the EU refuses to do.

Granting stock market equivalence is the EU's major leverage in trying to get the Swiss to finally sign off on the pact, but Switzerland's foreign minister has said repeatedly Bern will not be rushed into any deal although it remains open for talks.

In Bern, a government spokesman earlier told reporters the cabinet took no new decisions on the EU dossier, reiterating its position that it would reactivate counter-measures to ban trading of Swiss stocks on EU exchanges in response to any such action by the bloc.

That could make volume swell on the SIX Swiss Exchange -- Europe's fourth-largest -- at least temporarily.

Exchange industry officials say EU investors would still be able to trade Swiss shares, but only through a broker that is a member of the Swiss exchange in Zurich, rather than having a choice of exchanges like Aquis, Cboe and Turquoise that help to drive down prices.

These other platforms now account for nearly a third of the trading volume for Swiss stocks including heavyweights like Nestle, Roche and Novartis.

Although the loss of trading access granted under an equivalence regime would also have broad financial repercussions for the 28-country EU, it was seen as inevitable in Brussels after years of inconclusive negotiations.

The hardening of the EU stance is also partly linked to parallel talks under way with Britain over Brexit, as a lenient approach to the Swiss could encourage London to seek softer terms.

The treaty would have non-EU member Switzerland routinely adopt EU single market rules and pave the way for new trade deals, such as for an electricity union. But ahead of Swiss elections in October, it has drawn opposition from across the Swiss political spectrum for infringing national sovereignty. (Reporting by Francesco Guarascio in Brussels and Michael Shields in Zurich; Editing by Kevin Liffey and Andrew Cawthorne;)