UPDATE 1-Italy regulator moves further to curb short-selling

* Asks stakeholders who have lent shares to retrieve them

* Move targets short-sellers of bank shares - report

* Approved Sunday disclosure requirement on short-positions

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By Alberto Sisto

ROME, July 13 (Reuters) - Italy's market regulator Consob has asked stakeholders to retrieve shares they have lent in Italian companies in a bid to discourage short-selling.

Italian assets suffered a dramatic sell-off on Friday and Monday as investors worried that the country was being dragged into the euro-zone debt crisis cut their holdings of Italian debt and banking shares.

"Yes, we've exercised moral suasion by asking all those who have lent shares to retrieve them," Consob Chairman Giuseppe Vegas told journalists on the sideline of a conference.

He added the request was not binding.

Financial daily Il Sole 24 Ore reported on Wednesday that Consob wanted banking foundations, which are key shareholders in Italian banks, to retrieve the shares lent to short-sellers.

Short-sellers typically borrow securities and sell them on, expecting to buy them back later at a lower price and so pocket the difference.

Italian banks are exposed to sovereign risk because of their large holdings of domestic debt -- equal to around 190 billion euros, according to the Bank of Italy -- and the impact that rising government yields have on their funding costs.

On Sunday Consob introduced disclosure requirements on short-sales, asking investors to notify short positions on Italian stocks when they represent 0.2 percent or more of the company's share capital .

The information received since then shows that short positions are very limited, a source close to Consob said. (Reporting by Alberto Sisto, writing by Valentina Za; Editing by Will Waterman)