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| FTSE posts biggest one-day rise | FTSE posts biggest one-day rise |
| (20 minutes later) | |
| 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. | 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. |
| 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. | 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. |
| Banking shares were amongst the biggest gainers, with Royal Bank of Scotland up 32% and Barclays and HBOS both up 29%. | Banking shares were amongst the biggest gainers, with Royal Bank of Scotland up 32% and Barclays and HBOS both up 29%. |
| They were helped by a ban on short-selling of financial shares. | 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 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 shares |
| The restriction was announced late on Thursday by the Financial Services Authority (FSA) who banned 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. The technique works when investors borrow shares from another investor, and then sell them hoping the price will fall. | 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 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. |
| 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 | 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." |
| 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. |