Short sellers have been deserting the US stock market in droves during its sluggish summer sessions in a retreat that has helped fuel the recent volatile trading in AIG and other beaten-down financial shares, analysts said on Friday.

Short sellers seek to profit from price declines by selling borrowed shares and then “covering” their positions with purchases of the same stocks. When large numbers of short sellers close their positions by buying shares at the same time, the stocks involved can register explosive – and often inexplicable – gains.