UPDATE 1-No breakthrough in Swiss-EU battle of the bourses

The European Commission said it has had no contact with Switzerland in the past few days on avoiding the expiration at the end of this week of a regime which allows Swiss stock exchanges to access the European Union market.

Without an improbable last-minute breakthrough, many EU banks and brokers would be prevented from trading shares on Swiss bourses from July 1. They traditionally generate more than half the turnover on Swiss stock markets. "There has not been any contact," the EU executive's spokeswoman told a news conference. She said there was no update from last week's meeting of the EU Commission that refrained from proposing an extension to the so-called equivalence regime.

Under EU rules, the EU executive had to decide by June 21 on whether to propose an extension of the equivalence regime. It did not make any proposal by that deadline. As a consequence, the preferential regime will automatically expire on June 30. Brussels linked the extension to progress on a general partnership treaty, which was agreed in November after years of negotiations but has not yet been endorsed by Bern because of fears over its impact on Swiss labour laws and other issues.

Last week the commission said there was no progress on the partnership treaty. The spokeswoman repeated on Wednesday that the situation had not changed. She added, however, that Brussels remained open to finalise the overall partnership treaty with Bern by the end of October when the mandate of the current commission ends.