Germany announced late on Tuesday that it had banned "naked" short selling of shares, euro-denominated government bonds and credit default swaps, among its 10 most important financial institutions.
Short selling is a trade that bets the price of an asset will fall.
The naked variant of the practice involves a trader selling a financial instrument without first borrowing the asset or ensuring that it can be borrowed, as would be done in a conventional short sale.
Markets were worried that Germany's moves would be adopted by other European regulators.
However, France denied it was considering doing so and said it had not been consulted.
"Market participants concluded that the move was ill-thought out, unco-ordinated, and likely ineffective," Mark Chandler, global head of FX strategy at Brown Brothers Harriman, said.
"This would seem to be yet another case of a European government taking the wrong fork in the road."
Oil also fell to its lowest level in more than seven months at $69, with concern over tighter financial regulation lowering demand for riskier assets.