Short-selling banned in 4 European countries
Short-selling of certain stocks is now forbidden in France, Italy, Spain, and Belgium. The ban on short-selling comes as concerns about Europe's debt worsen.
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France is taking pains to assure markets that it won't be the next to see its credit rating downgraded.Skip to next paragraph
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Attention will be on France's release of second-quarter GDP figures on Friday. Some have warned that France could suffer if it has to spend significant new money to bail out more struggling eurozone states.
The leaders of the eurozone's biggest economies, Germany and France, announced they will meet Tuesday to discuss solutions to Europe's financial difficulties.
French President Nicolas Sarkozy's office said that the two will come up with "joint proposals" on the governance of the eurozone before the end of the summer. Chancellor Angela Merkel's spokesman said the meeting would focus on suggestions for how to improve the zone's economic policy and crisis management.
All three leading credit rating agencies reaffirmed their triple-A assessment of France, and analysts said they could not identify a trigger for the market turmoil.
"There's nothing behind it, it's a market of malintentioned speculators trading on pure rumors," said Marc Touati, an economist at French trading firm Assya Compagnie Financiere.
After Societe Generale, France's second-biggest bank, saw its share price drop nearly 15 percent Wednesday, the bank asked the French market regulator to investigate the rumors that it was on the ropes because of its heavy exposure to debt from troubled eurozone economies.
Societe Generale CEO Frederic Oudea called the rumors "totally unfounded" and "irrational." Speaking on France-Info radio, he urged calm and insisted that the bank's fundamentals are sound.
Oudea said Societe Generale had already accounted for its exposure to Greece's debts in its second quarter earnings.
France's growth prospects are considerably better than those of Italy and Spain's, but its economic expansion is slowing and it's failed for years to reduce a deficit that stood at 7.1 percent last year. No other eurozone economy with a triple-A rating has a higher debt than France's — around 85 percent of national income.
Adding to market worries, French presidential elections scheduled for the spring of 2012 may make it difficult for the government to implement further austerity measures at a time when the economy is slowing.
Elsewhere in Europe, Greece announced a rise in unemployment after a series of unpopular austerity measures aimed at dragging it out of debt that sparked troubles across the eurozone.
And Italy's finance minister, Giulio Tremonti, told lawmakers Thursday that tough and speedy measures are needed over the next two years to balance the budget in 2013. The market turbulence has seen Italy's borrowing costs in the markets spike up to uncomfortably high levels.