This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7624654.stm

The article has changed 18 times. There is an RSS feed of changes available.

Version 14 Version 15
Banking shares rise more than 30% FTSE posts biggest one-day rise
(about 2 hours 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. The FTSE 100 share index has closed more than 400 points higher, its biggest one-day rise, after the US confirmed a financial bail-out plan.
By mid-afternoon, RBS had gained 30%, Barclays was up 27%, HBOS had advanced 25%, and Lloyds TSB had added 19%. It ended the day 8.8% higher at 5311.3 points. But after a turbulent week on the markets, the FTSE was 105 points lower than its value on Monday.
The FTSE 100 index of leading shares also gained ground. It was up 7.4% or 359 points at 5,239. Banking shares were amongst the biggest gainers, with Royal Bank of Scotland up 32% and Barclays and HBOS both up 29%.
The surge comes at the end of a turbulent week when the FTSE had lost 10% of its value by Thursday. They were helped by a ban on short-selling of financial shares.
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?See banking sector sharesThe 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?See banking sector shares
Late on Thursday, the Financial Services Authority (FSA) announced its temporary move to ban short-selling in a number of financial shares. The restriction was announced late on Thursday by the Financial Services Authority (FSA) who banned 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
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.
Short-selling in layman's terms
"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'
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".
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%.
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.
Name
 Name