* Justice Min-withdrawal of UBS licence could cause failure
* Minister says UBS failure would hit economy-press report * Fear UBS data may be passed to Germany hits stock-traders
* UBS shares down 0.9 percent, hit lowest since July
(Adds German finmin calling Swiss on stolen bank data)
By Lisa Jucca
ZURICH, Feb 1 (Reuters) - Shares in UBS AG UBSN.VXUBS.N fell to a 6-1/2 month low on Monday after the justice minister underscored the risk to the Swiss economy should the bank's settlement of a U.S. tax dispute unravel.
Traders said news Germany was considering buying data of 1,500 possible tax evaders with Swiss bank accounts from an informant also weighed on the shares.
UBS settled a damaging tax row with the United States in August by agreeing to transfer data on 4,450 clients to U.S. tax authorities. But that deal is in question after a Swiss court ruled last month that most of the data cannot be transferred. [ID:nWEA7670]
The threat that UBS could lose its license in the United States, and face collapse as a result, has hung over the bank since the tax dispute escalated at the start of 2009.
“We know ... the Swiss economy and the job market would suffer on a major scale should UBS fail as a result of its licence being revoked in the United States,” Justice Minister Eveline Widmer-Schlumpf was quoted as saying in an interview with Swiss newspaper Le Matin Dimanche, published on Sunday.
The stability of UBS, which had to be rescued by the state in the middle of the financial crisis, is vital to Switzerland as the bank’s liabilities are worth several times the country’s gross domestic product.
Even though UBS has stabilised its financial situation by hugely reducing its balance sheet as well as risks, it needs to resolve the U.S. dispute to win back wealthy clients.
Shares in UBS, the world's second-largest wealth manager by assets, were down 0.9 percent at 13.89 Swiss francs at 1153 GMT, recouping some earlier losses but underperforming a rising DJ Stoxx European banking index .SX7P. The stock fell as low as 13.62 francs, its lowest since mid July.
German Finance Minister Wolfgang Schaueble told his Swiss counterpart Hans-Rudolf Merz that authorities in a German state had been offered for sale data on clients of a Swiss bank, the Swiss finance ministry said.
German authorities were still deciding how to respond, the ministry said.
At the weekend, a German newspaper reported some the data German authorities had been offered pertained to UBS clients. The bank said this was “speculation.” [ID:nLDE60U096]
UBS and the Swiss government had hoped to put U.S. accusations that the bank helped rich American dodge taxes firmly behind the bank when the case was settled in August.
But a Swiss administrative court ruling saying data belonging to a UBS client should not be transferred to the United States as this would break Swiss law has put the deal in jeopardy and is creating a massive legal headache for Berne.
Under the terms of the August deal, UBS could end the deadlock if at least 10,000 of its U.S. clients with secret Swiss accounts declare themselves to U.S. tax authorities.
But the IRS has so far declined to say how many of the nearly 15,000 taxpayers who have taken advantage of a U.S. tax amnesty are UBS customers.
“We want to know how many of the 14,700 people who, after violating U.S. laws, turned themselves in to U.S. tax authorities, are clients of UBS,” Widmer-Schlumpf said.
UBS is scheduled to report its annual results next week. (Additional reporting by Catherine Bosley; Editing by Erica Billingham and David Holmes)