* Portugal Telecom suffers from potential credit risk
* Shares fall as much as 13 pct, then recover
* Short-selling ban imposed on Thursday night (Adds Portugal Telecom, analysts' quotes)
By Andrei Khalip and Laura Noonan
LISBON/LONDON, July 1 (Reuters) - Banco Espirito Santo (BES) shares bounced from one-year lows on Tuesday, after authorities banned short-selling in the stock and the Portuguese bank attempted to allay concerns over problems at its parent company and possible losses in Angola.
The ban on short-selling in BES, Portugal's biggest listed bank by assets, was imposed by market regulators in London and Lisbon to limit what has been a 40 percent drop in BES stock over the past three weeks.
BES has been under a regulatory spotlight for months after saying it had sold to retail investors debt that was issued by Espirito Santo International (ESI), a holding company of the family which independent auditors in Luxembourg classified as having serious financial problems.
Yet the fallout from issues relating to the Espirito Santo family holding companies stretch beyond BES. Shares in Portugal Telecom (PT) fell sharply as some analysts warned of potential credit risk from 897 million euros ($1.2 billion) in debt PT has bought from another family firm, Rioforte.
"Rioforte may not be able to refinance the commercial paper and may have to recapitalise debt or issue convertible bonds," Javier Borrachero, an analyst at brokerage Kepler Cheuvreux wrote in a note, adding that the investment "raises big questions about the treasury policies" at PT.
PT has said it chose to invest because the rate was attractive and based on its long-standing good relationship with BES and Espirito Santo Group.
Shares in PT, which has cross-shareholdings with BES, fell 4.7 percent by market close. Ripples were felt as far away as Brazil, where shares in Oi, with which PT combined some assets earlier this year, fell 4 percent.
Short selling, which bets on a stock losing value, can cause shares to fall faster, because short sellers borrow shares, sell them into the market, then repurchase them later.
Trading in BES's largest shareholder, Espirito Santo Financial Group (ESFG), another family holding company, was briefly suspended. It fell 1.4 percent on Tuesday.
After initially rising on Tuesday morning, BES shares fell more than 13 percent to their lowest since July last year, before rallying to be up 13.8 percent. Some analysts said volatility was likely to continue at least until July 31, when BES shareholders vote on new leadership at the bank.
"There's basically no investor confidence right now, as long as the sentiment does not stabilise high volatility in BES will continue," said Andre Rodrigues, an analyst at Caixa BI.
"The problem is that holding companies like ESI and Rioforte are not listed, so some key information is not available," said Rodrigues. "Their problems could lead them to sell their shares in the bank and that has pressured the shares," he said, adding though he saw little risk for BES itself in terms of its debt.
The Espirito Santo family lost control of the bank after its 1.05 billion euros share sale on June 11, but remain its largest investor with a 25 percent stake.
Though the family's representatives have left the bank's board and the family patriarch has stepped down as the bank's CEO, some issues relating to BES's relationship with its founding clan and its many holdings are yet to be clarified.
ESFG has said it expects investors who bought the debt issued by ESI will get their money back after a restructuring.
On a call with investors on Monday, BES's new management said retail investors were owed 650 million euros by Espirito Santo companies, down from 2.1 billion at the end of 2013.
Monday's call was aimed at assuaging investor concerns about the bank's stock. Yet the conference call lasted only eight minutes before being aborted by what the bank said in a statement before Tuesday's market open were technical problems, due to the fact that 800 people had joined as participants.
Immediately after the call, shares accelerated their earlier losses to close down 16 percent.
In its Tuesday statement, BES said the European Central Bank had agreed to accept an Angolan state guarantee covering 70 percent of BES's troubled Angolan loan book.
The Angolan bank, of which BES owns just over half, has been a concern for investors since it emerged that part of the loan portfolio did not have an appropriate level of guarantees or collateral.
The Angolan state subsequently agreed to provide a guarantee for 70 percent of the loan book. Angola is BES's second-largest market, with loans totalling 6 billion euros.
In a note to clients, Banco BPI analyst Andre Bandeira said another key concern was management's statements on the Monday call that BES's exposure to other holding companies were higher than previously stated.
The bank said it had about 1 billion euros worth of exposure to companies within the wider group, including 780 million euros to ESFG and 200 million to Rioforte. It had not previously disclosed the Rioforte liability.
$1 = 0.7331 Euros Editing by Alessandra Galloni and David Holmes