Germany and France have joined forces to call for a swift, European Union-wide ban on the short selling of some shares and government debt.

Angela Merkel, the German Chancellor, and Nicolas Sarkozy, the French President, co-signed a letter urging the European Commission to bring forward proposals for tougher rules on financial speculation - including a ban on naked short selling - to July. Previously proposals were expected in October.

"The return of strong volatility in the markets makes it necessary to question certain financial methods and certain products such as naked short-selling and credit default swaps," the leaders said in the letter.

Short-selling takes place when an investor borrows shares, sells them, and hopes to make a profit by buying them back when the price falls. Naked short selling involves investors selling a share or a bond without actually borrowing the security.

The process has come under fire from senior European politicians, most notably Ms Merkel, who have blamed short selling for exacerbating the euro-zone debt crisis, prompting market volatility and a sharp fall in the value of the euro.

However, the reaction has prompted criticism among investors and City commentators who have argued that leaders are applying an overly simplistic critique.

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