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A stock specialist watches prices on the floor of the New York Stock Exchange on August 4, 2011. The Dow Jones Industrial Average plunged 4.3 percent Thursday, its worst one-day drop in more than two years, as global markets melted down over fears of another world economic downturn. The Dow was down 512.76 points to 11,383.68; the broader S&P 500 lost 4.8 percent to 1,200.07, while the tech-heavy Nasdaq Composite plunged 5.1 percent to 2,556.39. AFP PHOTO/Stan HONDA - 

STEVE CHIOTAKIS: We start in Europe this morning where France, Italy, Spain and Belgium this morning put a ban on so-called "short-selling." At least for the next few days, people in those countries won't be able to bet that a bank or financial stock will go down. The news originally spooked investors -- the last time the ban happened was 2008, during the financial crisis -- but it looks at the moment like the news is allowing European investors to relax just a bit.

So what's this ban supposed to do? Marketplace's Jeff Horwich explains the concept of short selling.

JEFF HORWICH: Want to sell short? Find a stock you think is going to tank -- like a bank you think is holding too much bad debt. France's Societe Generale was trading at $30 just a week ago. Borrow a bunch of that stock from someone and sell it. When the price sinks to 20 bucks a share, like it did yesterday, you buy the shares back, give them to the person you borrowed from, and pocket the $10. Totally legal -- usually. But one fear is that short-selling creates a bunch of people with a direct financial interest in creating and spreading bad gossip. Ion-Marc Valahu runs the Clairinvest mutual fund in Geneva.

ION-MARC VALAHU: The latest one, the biggest one, was the potential downgrade of France. That came from a tabloid newspaper from the weekend. If those types of rumors start taking hold, we need to calm things down.

The European regulators hope that by banning short-selling in bank stocks, probably for a few weeks, they can get the rumor mill to chill. Valahu makes his trades himself -- no computer programs. And he says he can barely keep up with the crazy market swings. So he thinks it's worth a shot.

VALAHU: Yeah, in the short term, I think it's reasonable to let things settle down a little bit so that everybody can think.

The morning's initial evidence has bank stocks leading the rise in European markets. But Soledad Pellon, an analyst in Madrid with IG Markets, expects the short-selling bans to have a negligible effect.

SOLEDAD PELLON: It was done in 2008 and it did not have any results in the short term -- neither on the long term. So I don't think this is the proper way of trying to solve this volatility problem and this panic in the markets.

Pellon would like to see bolder moves, like the European Central Bank buying more Spanish and Italian bonds and promising to hold them for longer. Quite unlike the short-selling ban, she says that would demonstrate genuine confidence in Europe.

I'm Jeff Horwich for Marketplace.

Follow Jeff Horwich at @jeffhorwich