UPDATE 2-U.S. judge recommends returning treasure to Spain

* U.S. judge says shipwreck is Spanish warship Mercedes

* Recommends returning treasure to Spain

* $500 million in gold and silver coins at stake

* U.S. treasure hunter's stock plunges (Updates with closing stock price, company comment)

By Jim Loney

MIAMI, June 4 (Reuters) - A U.S. judge said a shipwreck found by an American treasure hunting company is the Spanish warship Mercedes and its loot should be returned to Spain, but the firm said on Thursday it would contest the non-binding decision.

The recommendations on Wednesday by a magistrate judge in Tampa, Florida, marked the latest step in a lengthy battle between the treasure hunters, Odyssey Marine Exploration Inc (OMEX.O), and the governments of Spain and Peru over nearly 600,000 silver and gold coins valued at some $500 million.

The Spanish government hailed the decision from Magistrate Mark Pizzo, which called for the treasure to be returned to Spain within 10 days. But it was simply a recommendation to a U.S. district court judge, who will issue a final order.

"I am delighted that the judge has ruled that the ship belongs to Spain and the treasure belongs to Spain. It is a very important decision," said Spanish Culture Minister Angeles Gonzalez-Sinde, adding it set an important precedent.