Iceland suspends trading in bank stocks

Trading in financial shares has been suspended on the Icelandic stock exchange ahead of an expected government announcement.

The suspension applies to trading in shares issued by Kaupthing, Landsbanki, Glitnir, Straumur-Burdaras, Exista and Spron.

"The Financial Supervisory Authority has concluded that uncertainties regarding the issuers are likely to disrupt normal price formation, and as such, any trading could be detrimental for investors," the OMX Nordic Exchange in Iceland said in a statement.

"Furthermore, this decision has been made to ensure equal treatment of investors, as the issuers cannot ensure confidentiality of price-sensitive information which has not been made public."

Icelandic banks, which have funded the country's recent private equity boom, have been severely affected by the lack of short-term funding available.

The government has already nationalised one bank, Glitnir.

Local media are speculating that some of the remaining banks may be merged to create a stronger institution.

There are also local calls for Iceland to draw back its assets held overseas to support the nation's economy.

Currently Icelandic investors own large sways of the UK high street, with stakes in chains such as House of Fraser, Oasis, Warehouse and Hamleys, but not Iceland.