A group of Europe’s largest hedge funds and investors in hedge funds called on the City watchdog to relax its ban on short selling financial stocks and warned that attacking the industry could “jeopardise the status of London as one of the world’s leading financial centres”.

In a letter to the Financial Times, Antonio Borges, chairman of the Hedge Fund Standards Board and a former central banker, pointed out that the UK’s Financial Services Authority had imposed a longer ban than any other regulator.