Stock Market

Japan will extend limits on the short-selling of stocks beyond the end of this month, two sources said on Friday, as the world's No.2 economy struggles to prop up its tumbling stock market.

The regulatory Financial Services Agency will keep in place limits on short-selling introduced in October and scheduled to expire this month, said the sources, who spoke on the condition of anonymity because the information is not yet public.

Short-selling is a strategy where investors bet a stock's price will fall.

An investor borrows a stock and sells it, aiming to buy it back at a lower price and pocket the difference as profit.

The measures include a ban on "naked" short selling -- where investors sell a stock without first borrowing it -- and a requirement that short-sellers declare when their positions exceed 0.25 percent of a company's outstanding shares.

A spokesman for the FSA said it was considering what to do with the temporary measures but that no decisions had been made.

The regulations appear to have had little effect in shoring up stock prices.

The benchmark Nikkei share average has lost 12 percent since the end of October, hit by nagging concern about the outlook for the world economy.

"It's not as though much will change," said Hiroichi Nishi, a general manager in the equity division at Nikko Cordial Securities.