* EU moves to push Swiss bourses out of market by June 30
* Swiss vow to impose retaliatory measures
* Fight escalates as EU faces similar concerns posed by Brexit
* Market disruption likely but share trading could partly continue (Recasts with Swiss government statement)
By Francesco Guarascio and Michael Shields
BRUSSELS/ZURICH, June 21 (Reuters) - Investors in the European Union and Switzerland will lose direct access to each others' stock exchanges from July 1 in an escalating row over a stalled partnership treaty.
Frustrated with Swiss foot-dragging, 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 negotiated for years, the diplomat said.
The move by its biggest trading partner will prompt retaliation from Bern, which last year drew up contingency plans to block by decree trading of Swiss shares on EU-based exchanges.
"Should the EU not extend Swiss exchanges' access to the EU market Switzerland would activate the protective measures decided on 8 June 2018 with effect from the end of June," a government spokesman said by email.
The blue-chip Swiss Market Index ended down 0.6% but off session lows shortly before the market close.
Bern's request this month for "clarifications" on three areas - protecting wages, regulating state aid and defining the rights of EU citizens in Switzerland -- is 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.
The Swiss measures 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, create a more efficient platform to resolve disputes, and pave the way for new trade deals, such as for an electricity union.
But ahead of Swiss parliamentary elections in October, it has drawn resistance from across the Swiss political spectrum for infringing national sovereignty.
Reporting by Francesco Guarascio in Brussels and Michael Shields in Zurich; Editing by Andrew Cawthorne and Louise Heavens