European countries extend short-selling ban

Several European countries announced that they were extending their bans on short-selling stocks imposed two weeks ago amid a spike in speculative trading.France, Spain and Italy decided to extend their restrictions on short-selling and Belgium which had banned them for an unlimited time reaffirmed its position, a spokeswoman for the European Securities and Markets Authority said.France, Belgium, Spain and Italy banned the speculative practice of short-selling stocks two weeks ago as their financial markets came under intense pressure.In short-selling stocks investors are basically betting that they will fall in price. They borrow the stocks from a broker, sell them and then buy them back later at a hopefully cheaper price to pocket the difference.Supporters claim the practice allows investors a hedge against risk but critics say it only adds to the downward pressure in falling markets and serves no real purpose beyond speculative trading for short-term profit.France extended its ban November 11, Italy and Spain to the end of September.France said it would consult next month with its counterparts in Belgium, Italy, Spain plus Greece about lifting the short-selling ban.The aim is to lift the ban as soon as market conditions allow it and, to the extent possible, in a coordinated way, said the agency.