Spain bans short-selling of market shares

By the Associated Press | July 23, 2012 | 9:37 AM EDT

MADRID (AP) — Spain's market regulator says it has temporarily banned short-selling of shares on its stock indexes owing to volatility in Spanish and European markets.

The country's CNMV stock market watchdog said the measure would be kept in place for three months. It noted that Italy took similar steps Monday.

In a short sale, investors sell stock that they do not own, betting that they can buy it back at a lower price. The investor seeks a profit by betting that the price of certain shares will fall.

Short-selling of shares has been blamed for driving down markets during the financial crisis.