UPDATE 1-Swiss prosecutor says alleged data thief arrested

* Swiss arrest alleged Hyposwiss client data thief
* Individual held in custody as criminal investigation proceeds
* Hyposwiss latest in string of Swiss data theft cases

ZURICH, Feb 29 (Reuters) - Swiss police have arrested a man for trying to sell confidential client data from Hyposwiss Private Bank, Switzerland's prosecutor said on Wednesday.

The prosecutor said the unnamed individual, formerly employed by a firm that provided services to Hyposwiss, had approached a law firm with the data, and remains in custody after his Feb. 16 arrest.

Hyposwiss Private Bank's owner St. Galler Kantonalbank deferred questions to the prosecutor who would not give further details because the investigation continues.

Swiss banks have been hit by several cases of alleged data theft as foreign pressure ramps up on the alpine nation's bank secrecy laws.

One of the largest cases involved HSBC's Swiss private bank, which apologized after up to 24,000 accounts were handed over to French tax authorities stolen by Herve Falciani, a former HSBC computer specialist.

Last year, Credit Suisse paid a 150 million euro ($201 million) fine to end a German investigation alleging bank employees helped wealthy Germans dodge taxes.

Switzerland's banking secrecy rules, which are often used by foreigners to hide money in secret accounts, have come under pressure from other countries in recent years as their cash-strapped governments try to crack down on tax dodgers.

The first case in the recent series was in 2008, when stolen client data revealed that Klaus Zumwinkel, the former chief executive of German mail and logistics company Deutsche Post, had a Liechtenstein trust with LGT.