As share prices plunged Friday on the Milan Bourse, the country's stock regulator, Consob, banned all short sales of stocks until October 1.

Consob in a statement made the ban effective from 2 pm (1200 GMT) after the Milan Bourse's benchmark S&P/Mib index experienced its biggest slide in a decade.

Short-sellers try to profit from falling prices, borrowing stock in the hope of replacing it later at a lower price.

Also on Friday, Prime Minister Silvio Berlusconi urged citizens with cash to buy rather than sell shares, and "be stronger than the panic and the madness" currently governing world markets.

Berlusconi, speaking following a cabinet meeting in Naples, also recommended investors buy shares of energy giant ENI and electricity supplier Enel - both state controlled companies.

At 3:15 pm the S&P/Mib was down 8.78 per cent at 19,951 with the country's largest bank by assets, UniCredit, leading the plunge by losing 12.45 per cent of its value.

Consob had already banned short sales of banking and insurance stocks on October 1.