BERLIN: Germany yesterday halted short-selling in financial shares, when investors borrow company stock to sell it, following the example of Britain and the US.

The ban affects 11 shares including those of Aareal Bank, Allianz, AMB Generali, Commerzbank, Deutsche Bank, Deutsche Boerse, Deutsche Postbank, Hannover Re, Hypo Real Estate, MLP and Munich Re.

The Federal Financial Supervisory Authority, or BaFin, said short sales were banned with immediate effect until the end of the year, underscoring that they could lead to huge losses in the current global financial turmoil.

"In the prevailing situation in the markets, these could lead to losses for financial institutions," BaFin chief Jochen Sanio said.

However, the ban will be reviewed routinely, BaFin said.

Short-selling can put enormous pressure on markets if sentiment turns negative - as it has done over past months in the credit crunch - and is considered partly responsible for the dramatic fall in share prices seen in once mighty investment banks and other financial groups.

Short sales are designed to profit from a declining share price by an investor or broker arranging a sale of a share he does not own but has "borrowed" on an agreement to return the share at a future date.