The head of the London Stock Exchange said in Italian newspaper comments on Sunday that the German government's ban on short-selling is mistaken and risks being counterproductive.

In comments in Italy's business daily Il Sole 24 Ore, LSE Chief Executive Xavier Rolet said his exchange can help governments and investors manage the financial crisis by being more efficient and by advising on rules.

The German ban on naked short-selling of some financial instruments is a mistaken decision that risks having an effect which is the opposite of what is desired, he was quoted as saying.

I would in fact suggest to eliminate the ban. And then to construct market infrastructure that helps investors. Markets are global: you can't think of acting unilaterally because it would be counterproductive, he said.

The LSE took over Milan's stock exchange, the Borsa Italiana, in 2007 and Milan's post-trading activities can expand internationally in Europe and in emerging countries, he said.

On credit default swaps, the LSE is very cautious about getting involved because of difficulties in managing the risk guarantees, he said, adding that the LSE would be more interested in CDS indices than single CDS.

(Writing by Nigel Tutt; Editing by Hans Peters)