France, Italy to Ban Short-Selling Thursday Night: Source

Senior government sources tell Class CNBC, CNBC’s Italian partner, that a short-selling ban will be imposed in France and Italy after Thursday's market close.

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The report conflicts with what CNBC has been told by the European Securities and Markets Authority (ESMA). The independent European Union body, which provides a forum to national financial European regulators, told CNBC on Thursday that it is increasing its market surveillance following the rumor-led drop in French banks' sharesthat took place on Wednesday and then again Thursday.

While he couldn't comment on whether a ban on short-selling was to be carried-out, a spokesperson at the ESMA told CNBC there were talks about such a move but that such a move wouldn't be "today, or tomorrow, or next week."

The ESMA is aware of the speculation problem, he said, and that markets have become jittery about it. "Today it’s about France; earlier, it was about Greece," he said.

Being a coordination organ, the ESMA cannot enforce such a ban, but what they can do, the spokesperson said, is offer a table around which European regulators can meet and agree on a coordinated action.

Meanwhile, the UK regulator, the Financial Services Authority (FSA), told on Thursday that it had no plans to ban short selling in Britain.