Exchange traded funds that invest in Europe were lower Friday after several Eurozone countries extended their ban on short selling, or betting against, financial stocks.

In particular, German stocks have been volatile this week on whispers the country may see its triple-A credit rating downgraded.

A row over collateral and other problems are threatening the second bailout of Greece and raising default fears, MarketWatch reports.

The iShares S&P Europe 350 Index Fund (NYSEArca: IEV) lost 2.6% on Thursday. [ETFs May See Big Moves as Bernanke Speaks]

Spain and Italy have extended their short-selling bans to Sept. 30 while Belgium and France have not specified an end-date to their short-selling ban, stating that they will lift the ban  as soon as market conditions warrant, reports Huw Jones for Reuters. Greece will review its decision by the end of September.

ETFs tracking the countries include:

  • iShares MSCI Spain Index Fund (NYSEArca: EWP)
  • iShares MSCI Italy Index Fund (NYSEArca: EWI)
  • iShares MSCI France Index Fund (NYSEArca: EWQ)
  • iShares MSCI Belgium Index Fund (NYSEArca: EWK)

The self-imposed bans are an attempt to provide to support to the equities market, especially financial shares, amid the credit crisis. However, some observers question whether the move will support financial stocks.