UPDATE 1-Spain Jan-Oct budget deficit soars on stimulus cost

* Jan-Oct deficit 59.3 bln euros, 5.6 percent GDP

* Up nearly sevenfold from year-ago period

* Govt hopes to reach 3 percent European limit by 2012

(Adds background, treasury secretary)

MADRID, Nov 24 (Reuters) - Spain's central government deficit shot up nearly sevenfold from January to October compared to the same period last year, but the treasury secretary said it would try to cut back the shortfall more quickly than expected.

The deficit totalled 59.3 billion euros ($88.40 billion) in the first 10 months of the year, compared to a deficit of 8.5 billion euros in the same period of 2008, the Economy Ministry said in a news release.

The budget shortfall, equivalent to 5.6 percent of gross domestic product for the January to October period, has rocketed due to large fiscal stimulus programmes aimed at mitigating the effect of the economic crisis on unemployment and due to tumbling tax revenues.

The government expects the deficit for all of 2009 to total about 9.5 percent of GDP, well in excess of the 3 percent limit set under European rules.

The European Commission has given Spain until 2013 to bring its deficit back to the 3 percent limit, an extension of the earlier 2012 deadline.

But Treasury Secretary Carlos Ocana told reporters that Spain hoped to cut the deficit to 3 percent by 2012 anyway.

The government plans to cut back spending programmes, raise tax on capital gains and boost the headline rate of value-added tax by two percentage points to 18 percent.

The economy ministry did not provide a monthly breakdown for the budget deficit data, which does not include the balances of the social security system or provincial governments.

Between January and September, the government had reported a shortfall of 62.78 billion euros. (Reporting by Manuel Maria Ruiz; writing by Jason Webb; editing by Stephen Nisbet) ((jason.webb@thomsonreuters.com; +34 91 585 83 28; Reuters Messaging: jason.webb.reuters.com@reuters.net))