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| Banking shares rise more than 30% | Banking shares rise more than 30% |
| (9 minutes later) | |
| Shares in the UK's biggest banks jumped by more than 30% as investors welcomed restrictions on short-selling and news of a major US financial bail-out plan. | Shares in the UK's biggest banks jumped by more than 30% as investors welcomed restrictions on short-selling and news of a major US financial bail-out plan. |
| By early afternoon, HBOS had added 39%, RBS had gained 38%, Lloyds TSB had advanced 35%, and Barclays was up 31%. | |
| The FTSE 100 index of leading shares also gained ground. It was up 7.4% or 360 points at 5,240. | |
| The surge comes at the end of a turbulent week when the FTSE had lost 10% of its value by Thursday. | The surge comes at the end of a turbulent week when the FTSE had lost 10% of its value by Thursday. |
| The breathtaking rises in the price of bank shares this morning are symptomatic of a stock market that is bereft of reason and is being driven almost purely by fear and momentum. BBC Business Editor Robert Peston Read Robert Peston's latest blogWhat is short-selling? | The breathtaking rises in the price of bank shares this morning are symptomatic of a stock market that is bereft of reason and is being driven almost purely by fear and momentum. BBC Business Editor Robert Peston Read Robert Peston's latest blogWhat is short-selling? |
| Late on Thursday, the Financial Services Authority (FSA) announced its temporary move to ban short-selling in a number of financial shares. | Late on Thursday, the Financial Services Authority (FSA) announced its temporary move to ban short-selling in a number of financial shares. |
| Short-selling involves traders profiting from falling share prices. | Short-selling involves traders profiting from falling share prices. |
| The technique works when investors borrow shares from another investor, and then sell them hoping the price will fall. | The technique works when investors borrow shares from another investor, and then sell them hoping the price will fall. |
| The aim is then to buy back the asset at a lower price and return it to its owner, pocketing the difference. | The aim is then to buy back the asset at a lower price and return it to its owner, pocketing the difference. |
| Previously anyone could short a position in a company's shares, but typically hedge funds were the main players. | Previously anyone could short a position in a company's shares, but typically hedge funds were the main players. |
| The temporary ban on short-selling applies to 29 financial stocks. | The temporary ban on short-selling applies to 29 financial stocks. |
| Short-selling in layman's terms | Short-selling in layman's terms |
| It was introduced by the FSA due to concerns that short-selling had been a contributory factor in the sharp falls in HBOS shares before it was rescued by Lloyds TSB. | It was introduced by the FSA due to concerns that short-selling had been a contributory factor in the sharp falls in HBOS shares before it was rescued by Lloyds TSB. |
| The ban, which came into force at midnight on Thursday, will last until 16 January but the FSA will review its operation in 30 days. | The ban, which came into force at midnight on Thursday, will last until 16 January but the FSA will review its operation in 30 days. |
| "While we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets," said FSA chief executive Hector Sants. | "While we still regard short-selling as a legitimate investment technique in normal market conditions, the current extreme circumstances have given rise to disorderly markets," said FSA chief executive Hector Sants. |
| Paul Edmondson of City lawyers CMS Cameron McKenna said he wasn't sure if the ban on short-selling had been "fully thought through". | Paul Edmondson of City lawyers CMS Cameron McKenna said he wasn't sure if the ban on short-selling had been "fully thought through". |
| "The move is obviously intended to stop further speculative attacks on bank share prices," he said. | "The move is obviously intended to stop further speculative attacks on bank share prices," he said. |
| "Politically that must make sense - a perception of stability in the markets has to be a good thing and speculators profits are not a political priority. | "Politically that must make sense - a perception of stability in the markets has to be a good thing and speculators profits are not a political priority. |
| "Unfortunately, the fact is that short sellers provide a lot of the liquidity in the market which will now disappear." | "Unfortunately, the fact is that short sellers provide a lot of the liquidity in the market which will now disappear." |
| 'Heart of problem' | 'Heart of problem' |
| European stocks were also up strongly on Friday following the announcement overnight that US officials are working on a plan to help rid US banks of their bad debts. | European stocks were also up strongly on Friday following the announcement overnight that US officials are working on a plan to help rid US banks of their bad debts. |
| US Treasury Secretary Henry Paulson said he wanted a solution that "aimed right at the heart of this problem". | US Treasury Secretary Henry Paulson said he wanted a solution that "aimed right at the heart of this problem". |
| France's Cac 40 index was up 6%, while Germany's Dax had advanced 3.8%. | France's Cac 40 index was up 6%, while Germany's Dax had advanced 3.8%. |
| Wall Street's Dow Jones finished Thursday up 3.9%. | Wall Street's Dow Jones finished Thursday up 3.9%. |
| The UK short-selling ban applies to shares in the following companies - Admiral, Alliance & Leicester, Alliance Trust, Arbuthnot, Aviva, Barclays, Bradford & Bingley, Brit Insurance, Chesnara, European Islamic Investment Bank, Friends Provident, HBOS, Highway Insurance, HSBC, Islamic Bank of Britain, Just Retirement Holdings, Legal & General, Lloyds TSB, London Scottish, Novae, Old Mutual, Prudential, Resolution, Royal Bank of Scotland Group, RSA Insurance, St James's Place, Standard Chartered, Standard Life, and Tawa. | The UK short-selling ban applies to shares in the following companies - Admiral, Alliance & Leicester, Alliance Trust, Arbuthnot, Aviva, Barclays, Bradford & Bingley, Brit Insurance, Chesnara, European Islamic Investment Bank, Friends Provident, HBOS, Highway Insurance, HSBC, Islamic Bank of Britain, Just Retirement Holdings, Legal & General, Lloyds TSB, London Scottish, Novae, Old Mutual, Prudential, Resolution, Royal Bank of Scotland Group, RSA Insurance, St James's Place, Standard Chartered, Standard Life, and Tawa. |
| Have you been affected by the financial crisis in any way? Send us your story using the form below. Your comment and contact details will not be published. | Have you been affected by the financial crisis in any way? Send us your story using the form below. Your comment and contact details will not be published. |