German short selling ban hits markets in Europe and beyond

Emerging markets have been hit today by the euro’s continuing decline and Germany’s sudden partial ban on naked short selling. The reaction has been less dramatic than was feared in some financial quarters but the mood is very nervous.

With the FTSE 100 down 0.85 per cent and the FTSE Eurotop index of leading European shares 1.5 per cent lower in early London trading, there was little surprise that emerging Europe equities were down by as much as 2.8 per cent (in Russia). In Asia, the losses were far more limited, with the Nikkei 225 closing down 0.54 per cent and the worst performing market – Indonesia – 2.2 per cent lower in late trading. After its battering on Tuesday, the euro was holding its own, trading barely changed at 1.219 against the US dollar.