Stock exchange traded funds bounced on Thursday along with European markets amid talk of a ban on short sales of stocks as officials appear willing to take new steps to ease the credit crisis.

SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) jumped almost 4% as the Dow was on track for a nearly 400-point gain following its recent pullback.

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. [Short-Sale Ban?]

In bonds, Treasury ETFs plummeted while yields surged following an auction of 30-year notes that saw very weak demand.

The iShares Barclays 20+ Year Treasury Bond (NYSEArca: TLT) was down about 4% in afternoon trading. A leveraged ETF that bets against Treasuries, Direxion Daily 20+ Year Treasury Bear 3X Shares (NYSEArca: TMV), rallied more than 10%. [ETF Chart of the Day: Shorting Treasuries]

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