European stock indexes closed Thursday’s volatile session higher following reports a market regulator is considering endorsing a temporary ban on short sales of stocks.

The European Securities and Markets Authority is mulling recommending a ban on negative bets against stocks across the Continent in a bid to halt the plunge in markets, the New York Times reported.

Single-country exchange traded funds tracking troubled markets such as iShares MSCI Italy (NYSEArca: EWI) and iShares MSCI France (NYSEArca: EWQ) were seeing gains of more than 3% on Thursday in U.S. trading. European stock ETFs have been crushed lately on fears the debt crisis is spreading and that banks in particular are in danger.

Yet it wasn’t clear Thursday whether regulators would move ahead with a ban on short sales in Europe.

European Union states are unlikely to impose a blanket ban in response to volatile action in bank stocks, Reuters reported Thursday. “A Europe-wide short-selling ban doesn’t look likely,” an unidentified source said in the report.

iShares MSCI Italy

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