PARIS-The French gov­ern­ment was put un­der fur­ther pres­sure to cut deep­er in­to spend­ing af­ter fig­ures yes­ter­day showed growth in Eu­rope's sec­ond biggest econ­o­my ground to a halt in the spring, in an­oth­er sign that the glob­al econ­o­my is fac­ing ris­ing re­ces­sion­ary threats. With the worse-than-ex­pect­ed French growth fig­ures sug­gest­ing a pos­si­ble bud­get short­fall this year, gov­ern­ment min­is­ters may have to find ad­di­tion­al sav­ings ahead of a key meet­ing with Pres­i­dent Nico­las Sarkozy on Aug. 24. The flat growth re­port­ed in the sec­ond quar­ter of the year was at­trib­ut­able to a slump in con­sumer spend­ing and ex­ports, and came as pol­i­cy­mak­ers scram­ble to soothe in­vestor con­cerns that the coun­try could be the next ma­jor econ­o­my to lose its cov­et­ed triple-A cred­it rat­ing.

A move yes­ter­day by stock mar­ket reg­u­la­tors in France and else­where across Eu­rope to ban short sell­ing-a form of stock mar­ket spec­u­la­tion that some are blam­ing for the tur­bu­lent trad­ing in re­cent days-looked to be hav­ing some im­pact. But econ­o­mists stressed that any re­bound was very frag­ile, and some de­rid­ed the ban as mis­guid­ed and in­ef­fec­tive. French bank shares were per­form­ing solid­ly in Paris, with So­ci­ete Gen­erale up near­ly 5.7 per cent and Cred­it Agri­cole up over two per cent at the close of trad­ing yes­ter­day. Over the past cou­ple of days, French bank stocks, and So­ci­ete Gen­erale in par­tic­u­lar, have been huge­ly volatile amid ru­mors of their fi­nan­cial health.

The head of the French stock mar­ket reg­u­la­tor, the AMF, Jean-Pierre Jouyet, mean­while, said on RTL ra­dio that an in­ves­ti­ga­tion was opened yes­ter­day in­to the ori­gin of the ru­mors tar­get­ing So­ci­ete Gen­erale. The AMF an­nounced plans for the probe Wednes­day af­ter shares in So­ci­ete Gen­erale plum­met­ed, clos­ing 14.7 per cent low­er that day. The Eu­ro­pean Union's mar­kets su­per­vi­sor, the ES­MA, an­nounced the short sell­ing ban late Thurs­day night af­ter boost­ing sur­veil­lance of stormy mar­kets ear­li­er in the day. In a short sale, a trad­er hopes to make a prof­it by bet­ting on the de­cline in the price of a share. Reg­u­la­tors in France, Italy, Spain and Bel­gium are each im­ple­ment­ing the bans, whose de­tails vary from coun­try to coun­try.

Sev­er­al coun­tries banned short sell­ing dur­ing the fi­nan­cial cri­sis of 2008 to try to tame volatil­i­ty. But some ex­perts said the bans ac­tu­al­ly con­tributed to a feel­ing of un­cer­tain­ty. "News that French eco­nom­ic growth sput­tered to a halt in the sec­ond quar­ter may raise con­cerns that the Eu­ro­pean econ­o­my is be­ing im­pact­ed by the debt cri­sis that has af­flict­ed a num­ber of coun­tries and has fu­eled the tur­moil in the mar­kets. The French econ­o­my post­ed ze­ro growth in the sec­ond quar­ter, na­tion­al sta­tis­tics agency IN­SEE said. Gov­ern­ment econ­o­mists had fore­cast growth of around 0.2 per cent in the pe­ri­od. Con­sumer spend­ing slumped 0.7 per cent and ex­ports stag­nat­ed dur­ing the sec­ond quar­ter. Growth in the first quar­ter was near­ly 1 per cent.

Views on the weak per­for­mance were mixed, with warn­ings that a stag­nant econ­o­my will make it hard­er to re­duce the deficit. "As for France it­self, Q2's 0.7 per cent drop in con­sumer spend­ing was the sharpest in near­ly 15 years, sug­gest­ing that the house­hold sec­tor can no longer be re­lied up­on to sup­port the econ­o­my," said Jen­nifer McK­e­own, an econ­o­mist at Cap­i­tal Eco­nom­ics in Lon­don.

(AP)