Shares up at end of tumultuous week

Gains on both sides of the Atlantic followed one of the most volatile weeks in years, as investor sentiment oscillated wildly.

At times, investors cheered anti-crisis measures, such as the European Central Bank’s decision to support the bonds of Italy and Spain; at others their mood soured amid concerns over the state of the global economy and the exposure of banks to the debt of countries like Greece.

However, as the week progressed, the mood seemed to have calmed somewhat.

In Europe, London’s FTSE 100 jumped three per cent to close at 5,320.0, while Germany’s DAX was 3.5 per cent higher at 5,997.7. The CAC-40 in France gained four per cent to 3,213.8, even after data showed the French economy did not grow in the second quarter.

Sentiment was lifted yesterday after the US Commerce Department said that retail sales rose 0.5 per cent last month, the best showing since a 0.8 per cent advance in March.

The figures came a week after the downgrade of the US’s credit rating, which contributed to this week’s market turmoil.

The gains in Europe came after regulators in France, Italy, Spain and Belgium imposed temporary bans on short-selling of financial shares late on Thursday, following sharp sell-offs and temporary gains in French bank shares in particular that were blamed on false rumours. Greece had already banned short-selling on Monday.

The share prices of French banks, which fluctuated sharply in recent days, jumped yesterday, with Societe Generale up 5.7 per cent and Credit Agricole gaining 2.1 per cent.

In Belgium, Dexia banking group, which had also been under pressure, did particularly well, ending the day 17 per cent higher.

However, analysts questioned whether the short-selling ban would be successful in the long run.

Short selling is done by selling borrowed shares in hopes of buying them back at a lower price and pocketing the difference.