Several EU countries ban short sales

BERLIN, Sept. 22 (UPI) -- Several European countries, following the U.S. example, have now banned short sales of finance companies' shares to bring security to their volatile markets.

Britain, Germany, France, the Netherlands and Belgium have barred short sales, as did Australia, mirroring the step first taken by the U.S. Securities and Exchange Commission, which on Sept. 18 banned short selling on some 800 financial companies.

Short selling has investors profiting from falling share values by borrowing stocks and selling them in the hopes of buying them back later after the prices have fallen.

In Britain, the Financial Services Authority banned short sales of financial shares for the rest of the year.

Germany's financial regulator BaFin banned short selling on shares from companies including Commerzbank and Deutsche Bank for the remainder of 2008, with French and Belgium authorities banning short sales on firms including Dexia, Fortis and Credit Agricole.

Several hedge funds have announced they will go to court against the decisions. Politicians hope they will bring stability to the volatile financial markets.