Spain bourse regulator says no change to short-selling rules

Over the last few months, markets in Italy, Spain, France and elsewhere in Western Europe have suffered the heaviest losses of any major world region. The declines have been far worse than what most North American, Latin American and Pacific Rim investors have faced in their home markets.

But Europe may be primed for at least a short-term bounce, if it follows Wall Street’s lead. U.S. stocks rose Wednesday after eight straight down sessions.

Measured from its high earlier this year the Italian market’s FTSE-MIB index (charted at left) had plunged 26.6% through Wednesday. Few other major markets worldwide have fallen as sharply in 2011. And Italy's loss this year follows a 13% drop in calendar 2010.

Spanish stocks aren't far behind Italy, down 18.7% from their 2011 high. Switzerland is off 18.3% and the French and Dutch markets both are down 16.9%.

By contrast, the U.S. Standard & Poor’s 500 index, at 1,260.34 on Wednesday, was down a modest 7.6% from its 2011 high reached in late April.

Also measured from their 2011 highs, South Korea’s main index is down 7.5%, while the Canadian market has fallen 10.2% and Mexico is off 10.9%. (All price changes are in local currencies.)

Even Japanese stocks have managed to hold up reasonably well after diving following the country’s horrid March earthquake. The Nikkei-225 index is down about 10% from its February high.

Western European markets have been hammered by the continent’s never-ending government debt crisis. Less than two weeks ago, the European Union agreed on a new bailout of Greece that asked investors to voluntarily forgive part of Greece's bond debts. One goal of the EU package was to “ring-fence” the wounded economies of Greece, Ireland and Portugal and boost confidence that debt-hobbled Italy and Spain wouldn't follow them in needing full bailouts.

Spanish stock market regulator CNMV said on Friday there has been no change to the rules on equity short-selling in Spain, amid high volatility in both Spanish and Italian stocks.

Contrast to its euro-zone brethren, where bourses are generally flayed or flailing across the Continental plain.

Surely there’s a physical law, something in the realm of thermodynamics, that covers such market aberrations, right?

After all, we’re talking about Spain, the market that’s on the verge of debt-default infection. Spain, one of the principle-market-spookers-in-chief. Spain, site of so much recent vitriol in street protests. Spain, where government bond yields are now above 6%. And somehow Spain finds that now is a good day for gains.