EU internal market commissioner Michel Barnier was quoted on Wednesday as saying Brussels would conduct an internal investigation into the trading of credit default swaps related to Greece and other countries.

I want to know who did what ... I want to understand, Barnier, who has responsibility for financial services in the 27-nation bloc, said in an interview with the Financial Times.

The bulk of trading in credit default swaps (CDS) in Europe is transacted in London.

Germany and France have called for a crackdown on what they see as speculators amplifying Greece's problem by short-selling CDS contracts based on the country's sovereign debt.

The chairman of Britain's Financial Services Authority said on Tuesday curbing short-selling on the cost of insuring Greek debt would not alone solve volatility.

It is important that even if we look at this issue we don't overstate it. A fundamental issue that can drive volatility on spreads on Greek bonds is a whole load of long investors not being willing to buy, Adair Turner told lawmakers.

I believe the total amount of CDS short positions in the area of Greek problem debt is only 3-4 percent of outstanding Greek sovereign debt. The biggest driver is confidence levels and actions of long investors, said Turner.

(Editing by Ralph Gowling)

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