(Reuters) - The European Union's financial market regulator is holding a teleconference for all 27 national regulators to discuss short-selling of bank shares, two sources familiar with the situation told Reuters on Thursday. "A call is taking place," a regulatory source said, adding that it had been going on for more than an hour. Earlier ESMA, the European Union's financial market regulator, said it was monitoring bank share volatility closely and was in touch with national regulators.

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(Reuters) - A new crisis of confidence gripped Europe's banking industry on Thursday as its borrowing costs soared, lenders sought emergency funding, and some institutions reviewed exposure to French banks in particular. Shares in Societe Generale (SOGN.PA), whose shares dropped 15 percent on Wednesday, yo-yoed for most of the day in heavy trading, carrying other big French names in their wake this time.

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(Reuters) - One bank in Asia has cut credit lines to major French lenders while five other banks in Asia are reviewing trades and counterparty risk as worries about the exposure of French banks to peripheral euro zone debt mounts, banking sources told Reuters on Thursday. Rumors on Wednesday that France was to lose its AAA rating, later denied by ratings agencies, helped trigger the biggest widening in the European credit default swap index since the credit crunch in 2008.

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(Reuters) - AOL said on Thursday it would buy back $250 million of its stock, a move presumably intended to boost confidence in the shares, which fell 32 percent in two days. After the announcement, the shares were up nearly 16 percent. The drop had wiped out $518 million in value, since the company reported second-quarter results on Tuesday that missed profit expectations amid weak advertising growth.

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(Reuters) - Shares in Rupert Murdoch's News Corp (NWSA.O) rose as much as 15 percent in early trading on Thursday, a day after the company's management posted solid quarterly results, gave a healthy full-year outlook and promised a more aggressive buy back. Murdoch said on Wednesday he had the backing of his board to continue as chairman and chief executive after a critical five weeks for the company in the wake of a phone-hacking scandal at its British newspapers unit that threatened to unravel his control of the company he founded.

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(Reuters) - Deere & Co (DE.N) said U.S. securities regulators are probing the farm equipment maker for possible violations of laws on activities in other countries. Deere said it is cooperating with the investigation. The Wall Street Journal said the Securities and Exchange Commission is looking at whether Deere violated the Foreign Corrupt Practices Act, which bars bribes to foreign officials.

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(Reuters) - Wall Street stocks fell sharply on Wednesday, erasing most of the previous day's gains, on fears of trouble in the French banking sector, which has significant exposure to shaky European debt. U.S. financial stocks led the decline on worries any French bank problems could spread to them. The KBW bank index slid 7 percent. Large financial institutions fell sharply, including Bank of America Corp down 11.2 percent to $6.76.

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(Reuters) - Standard & Poor's, whose unprecedented downgrade of U.S. debt triggered a worldwide stocks sell-off, is pushing back against a U.S. government proposal that would require credit raters to disclose "significant errors" in how they calculate their ratings. S&P, which was accused by the Obama administration of making an error in its calculations leading to Friday's downgrade, raised concern about the proposed new corrections policy and other issues in an 84-page letter to the Securities and Exchange Commission, dated August 8.

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(Reuters) - Goldman Sachs said on Wednesday a third round of quantitative easing from the Federal Reserve is likely after the U.S. Federal Reserve promised to keep rates at extraordinarily low levels for at least two more years. "We now see a greater-than-even chance that the FOMC will resume quantitative easing later this year or in early 2012. We have changed our call because today's statement suggests that the committee's reaction function to incoming economic news is more dovish than we had previously thought," Jan Hatzius, chief economist at the firm, said in a note.

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(Reuters) - So much for the vaunted Federal Reserve consensus. Fed Chairman Ben Bernanke made clear on Tuesday that tackling weak growth is the top priority for the central bank as he pushed aside an unprecedented level of internal dissent in promising low rates until at least mid-2013. The central bank indicated it is ready to venture further into the unknown territory of ultra-cheap money to soothe nervous financial markets and spur growth. That was despite objections from some officials who worry such an approach risks fueling inflation down the road.

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