Splitting headache

Short-selling bans: The last thing that European markets need is division and weakness among supervisors. But that is the immediate outcome of the ad-hoc bans on short-selling introduced overnight by France, Italy, Spain and Belgium.

It is not clear whether there was a big row between European member states over whether to implement restrictions on betting on share-price falls. Either way, the sight of four countries going it alone makes them look like they have something real to worry about. Those four countries happen to be those that are the subject of mounting concern about their sovereign credit status.

As in 2008, the signs are that the bans will offer only temporary relief. The immediate reaction of the market was to sell some of the banks that have been in the firing line in recent days. France's Societe Generale opened up slightly, then fell 5.5 per cent, then bounced again - hardly a stable market. The moves may reflect reduced liquidity in the stocks affected. It is hard to avoid the impression that regulators are squabbling, and some have been bounced into panic action by their governments that won't ultimately be successful in ensuring market stability. The resulting damage to credibility could be a heavy price to pay if the situation deteriorates further.