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Four eurozone governments ban short selling
France, Italy, Spain and Belgium last night introduced a ban on the short selling of financial stocks for 15 days in response to sharp share price falls this week, but failed to convince other governments to go along with an EU-wide ban. EU market watchdog, ESMA, described the ban as “harmonised regulatory action.” Spain seems to have banned short-selling in all products related to financials, France has limited the ban to equities.

The ban has been met with criticism. Bloomberg quotes Jim Chanos, the short seller known for predicting Enron Corp.’s collapse, warning, “The interbank lending market froze up completely in October to December 2008 – after the short-selling bans.” Handelsblatt quotes Frank Schäffler, finance spokesman for German junior coalition partners, the FDP, saying, “One shouldn't ban the fire alarm when it’s burning.”
BBC EUobserver BBC: Today El País FT FT: Lex FT 2 WSJ Guardian Times Telegraph Irish Times 2 Irish Independent IHT City AM TaloussanomatBusinessweek Handelsblatt Handelsblatt 2

French economy stagnant as growth figures fail to meet expectations
The French economy has stagnated, with the latest figures revealing an unexpectedly sharp fall in economic activity from 0.9% GDP growth in the first quarter of the year to zero for the second quarter. Previous estimates had put growth at 0.3% in the second quarter. French President Nicolas Sarkozy and German Chancellor Angela Merkel are due to meet in Paris on Tuesday and make proposals on how to strengthen the eurozone's economic governance. An article in Die Welt carries the headline, “Stagnation in France threatens the eurozone.”

Meanwhile, the FT notes that senior EU officials are preparing to fast-track funding for a €20bn Greek bond buy-back using loan pledges left over from the first Greek bailout, rather than the revamped bailout fund, the EFSF, because its extended scope and powers will not be approved by national parliaments in time. However, it remains unclear whether the IMF would back such a move.

The Dutch parliament will hold an emergency session next week to discuss the country’s extra contributions to the EFSF, with the FT quoting a Maurice de Hond opinion poll showing that respondents said they wished the Netherlands had never joined the euro by a margin of 56% to 39%. Tomorrow’s front page of Dutch magazine Elsevier will carry the headline, “Euro crisis. Politicians, now what?”, with the subtitle, “The best exit strategy is the break-up of the eurozone.”

The WSJ notes that the EU, IMF and ECB this morning gave a positive first review of Portugal's bailout programme, clearing the way for it receive the next €20 billion loan instalment.
Les Echos Times 2 Guardian Guardian 2 Telegraph 2 Irish Times City AM 2 La Tribune WSJ 2 Irish Times 3 Irish Independent IHT IHT 2 FT 3 WSJ 3 FT 4 ExpressReuters France Kathimerini Elsevier Bloomberg Le Monde WSJ 4 FT: Editorial FT: Barber FT: Alphaville FT: Letters WSJ: Smith WSJ: Heard on the Street BBC: Peston Economist: Leader Economist Independent: O’Grady Mail: Brummer Economist 2 Economist 3 Le Monde: Wyplosz Le Figaro: de Capèle Le Figaro: SirouIl Sole 24 Ore: Dadush Il Sole 24 Ore: Bufacchi La Stampa: Sorgi La Stampa: Lepri La Stampa: Zincone Welt

Divisions within Italy’s ruling coalition remain over new austerity package
La Stampa reports that Italy’s ruling coalition remains split over the details of the new austerity package ahead of an emergency meeting to be held this evening, after the markets have closed. Following a speech in parliament yesterday, Italian Economy Minister Giulio Tremonti was strongly criticised for his plans to press ahead with pension reforms and cuts to local governments. Coalition partners Lega Nord and four prominent MPs from Berlusconi’s party have threatened to vote against the package.
Corriere della Sera Repubblica Il Sole 24 Ore 2 La Stampa Corriere della Sera 2 Il Sole 24 Ore Corriere della Sera 3 FT FT Guardian

The Telegraph reports that the European Commission yesterday approved the Spanish government’s plans to halt the flow of Romanian’s seeking employment in the country. The move marks the first time that the “safeguard clause” to restrict freedom of movement has been invoked.
El País FT Times Telegraph

El País reports that a majority of pharmacies in Spain’s high-debt Castilla-La Mancha region remained closed yesterday to protest against the regional government’s delay in paying around €125m for medicines sold on prescription since mid-May.
El País

A leader in FAZ criticises the European Commission’s recent strategy paper on corporate social responsibility, arguing, “We already knew that the European Commission is too big, with its 27 members. Those who have nothing to do, come out with stupid ideas…In the world of certain Brussels Commissioners, the economy hasn't fulfilled its duty by paying taxes, but should also meet all kinds of new social and environmental goals.”
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The FT reports that the European Commission is planning to cap direct farm subsidies under the Common Agricultural Policy (CAP) at a maximum of €300,000 per year to any single farm from 2014, in a move likely to face opposition from France, the largest recipient of CAP funds.
FT Le Figaro

EUobserver reports that Swiss National Bank Vice-President Thomas Jordan has said that a temporary peg between the franc and the euro to curb the Swiss currency’s gains would be legal under the bank’s mandate. Following the statement, the Swiss franc dropped 5% against the US dollar.
EUobserver

UK

The Independent reports that the FSA is in talks with Britain's banks and their auditors to ensure consistent disclosure of their European sovereign holdings and stepped up its monitoring of exposures.
Independent

New on the Open Europe blog

Will Ireland have a eurosceptic President?
Open Europe blog

Dutch magazine Elsevier asks, “Politicians, now what?” Answer: “Break up the eurozone”
Open Europe blog

Is a solution to the eurozone debt crisis via the EU’s structural funds possible?
Open Europe blog

Tough talk from the speaker of the Slovak parliament: Back in the USSR
Open Europe blog