Sydney  - Australia's securities regulator Friday joined its counterparts in the United States and Britain in curbing the short-selling of shares that has contributed to the tumult on stock markets.

The Australian Securities and Investments Commission (ASIC) ruled that from Monday a temporary ban on what's called naked short-selling would take effect.

In naked short-selling, traders sell shares they don't actually own in the hope of buying them later at a cheaper price. ASIC said it was concerned some individuals were spreading false and misleading information about listed companies to provoke fire sales of securities at low prices.

The Australian Securities Exchange (ASX), which regulates the stock market, said that on Monday it would cancel a list of stocks approved for naked short-selling.

Minister for Corporate Law Nick Sherry said naked short-selling could be used to manipulate share prices.

"We believe that it has contributed to market volatility," he told national broadcaster ABC. "It's inappropriate in the current markets for this sort of behaviour to occur so we welcome the action by the ASX and ASIC."

The US Securities and Exchange Commission has placed a temporary ban on the short-selling of 799 stocks as part of concerted action to stabilize stock markets.

Britain's securities regulator, the Financial Services Authority, has slapped a temporary ban on the short-selling of finance sector stocks.

The ASIC action comes after Macquarie Bank, which saw its stock price fall 23 per cent in one day, claim that short-sellers were rumour-mongering in order to drive the investment bank's share price down.

"The US and Britain have moved against short-selling and now we have too," Sherry said.

He flagged legislation that would curb short-selling on a permanent basis. "As previously announced, the government will be introducing legislation to strengthen disclosure of covered short-selling into the parliament very shortly," he said.

The Australian stock market rose 4 per cent on Friday, wiping out most of the losses over the previous four days.

EL&C Baillieu director Richard Morrow told Australia's AAP news agency that the big gains were most likely the result of short-covering among investors following the surge on US indices. Short-covering is where investors buy the shares at a higher price than they sold them for to cover positions that have gone the wrong way.

"It smells of some very, very heavy short-covering, especially in the finance sector, specifically in Macquarie Group," Morrow said. (dpa)