Japan’s economy contracted during 2Q11 at a slower than expected pace by an annualised rate of 0.3 percent in the three months to the end of June, the cabinet office said. Real GDP was down 1.3 percent and showed stronger signs of recovery thanks to consumer spending in the wake of the March earthquake and tsunami disaster. Analysts had been expecting a drop of 2.6 percent for the quarter. On the news the MSCI Asia Pacific Index climbed 1.9 percent in Tokyo and the Nikkei 225 was up 1.37 percent. The country’s largest car manufacturer by value, Toyota Motors, rose 2.9 percent. European markets opened higher with the FTSE MIB Index up four percent, Euro Stoxx 50 up 0.87 percent and the Swiss index rising 2.15 percent.

Amid heightened international market volatility, ESMA, the EU’s regulator, announced late on Thursday that France, Belgium, Spain and Italy have banned short selling in an attempt to curb rumours and halt the precipitous fall in value of troubled EU banks. In Spain and France the ban will last 15 days and is only applicable to stocks in the financial sector. Financial institutions included BNP Paribas SA, Société Générale SA and Crédit Agricole SA in France, and Banco Santander and Bankia SA in Spain.  Belgium’s ban is restricted to four financials only and no concrete time duration was given. It was unclear which stocks would be affected and how long the ban would be in place for Italy. The prohibition which begins on Friday was imposed by ESMA in an effort “to restrict the benefits that can be gained from disseminating rumours, false and misleading news,” the regulator said.

The Paris stock exchange lost over five percent of value and French financials were hammered late on Wednesday amid rumours that French banks were in serious difficulty. France’s second-largest bank, Société Générale, which holds significant amounts in Greek and Italian debt, saw its shares drop by 21 percent before closing down 14.7 percent late on Wednesday. The FTSE fell 3.05 percent, in New York the Dow was down just over three percent, the CAC in Paris plunged 5.45 percent and the pan European Stoxx dropped 3.75 percent. European and Wall Street shares had resumed their fall after a rebound on Tuesday on fears France could follow the US and lose its coveted AAA credit rating. However, there had been no warnings issued by any of the credit rating agencies.


Asian stocks have rallied in early trading on Wednesday from their downward trend earlier in the week after the US Federal Reserve promised to keep interest rates near the zero level “at least through to mid-2013.”
 Europe’s stock markets also opened higher after overnight increases on Wall Street and Asian markets, which saw the Hong Kong rebound with a rise of 3.27 percent while Tokyo climbed 1.11 percent. Global stock markets have been plummeting since early August following an unprecedented US credit rating downgrade.
The FTSE 100 index gained 1.7 percent, Frankfurt’s DAX jumped 2.2 percent and Paris’s CAC-40 increased by 1.9 percent. At close of trading on Tuesday the Dow Jones Industrial Average finished up 3.9 percent at 11,239 while S&P’s 500-stock index rose 4.7 percent to 1,172.

European stock markets plummeted further on Tuesday following a sharp rise in Chinese inflation, adding to woes over debt contagion across the eurozone and fears of another US recession. Market volatility reached its peak when Britain’s FTSE 100 index, which traded 20 percent below its February peak of 6091 points, plunged officially into bear territory as analysts watched global stocks plummet. The Dow Jones Industrial Average lost 634.76 points, or 5.55 percent, to 10,809.85, while the Nasdaq composite slumped 174.72 points, or 6.90 percent, to 2,357.69. Volatility commenced after the Dow dropped 634 points or 5.5 percent following Standard & Poor’s announcement late on Friday that it downgraded US credit from AAA to AA+. US financial stocks, including that of Bank of America, which saw stocks fall 20.32 percent, were also hit as they suffered their worst one day share sell-off in over two years. Gold surpassed the $1,700 barrier in trade and was seen to reach as high as $1,721 and as low as $1,681, while the gold spot price per ounce rose $53.60 to $1,717. Traders dug into the metal’s safety net as crude oil prices dipped over fears of a double dip recession. The US Federal Reserve announced a policy meeting for later in the day as most UK news agencies reflected on overnight civil unrest leading to further market volatility.