(Adds details, background)
MADRID Jan 31 Spain's market regulator lifted
its ban on short-selling stocks and bonds on Thursday in a sign
of returning calm to markets targeted by speculators during last
year's euro zone debt crisis turmoil.
The regulator imposed the ban in July during a massive
sell-off in Spanish sovereign debt and shares. Stocks and bonds
have rallied since the European Central Bank said it would act
as a backstop to bets against peripheral euro zone countries.
Spain's borrowing costs have greatly eased since the height
of the crisis during the summer, and funding is easier for the
country's banks and corporations.
Some stocks seen as vulnerable to short selling, such as
Abengoa, Acciona, ACS and Indra
, were sold off in anticipation of the lifting of the
Short-sellers borrow shares in anticipation the price will
fall, booking a profit when they buy them back at a lower price.
(Reporting By Sonya Dowsett; Editing by Fiona Ortiz and Helen