THE CIA has asked the City regulators in London to investigate suspicious sales of millions of shares before last Tuesdays attacks in America in the belief that the paper trail will lead to the terrorists.

American authorities are investigating unusually large numbers of shares in airlines, insurance companies and arms manufacturers that were sold off in the days and weeks before the attacks.

They believe that the sales were by people who knew about the impending disaster.

The investigators are looking at so-called short selling transactions in several financial centres across the world involving shares that dropped dramatically after the attack.

Short selling involves borrowing shares, selling them to a third party, then buying them back when the price falls. Large profits can be made if a share price falls significantly after it has been sold to the third party.

The Financial Services Authority (FSA), the stock market watchdog, was drawn into the investigation because it has a transaction monitoring department that checks suspicious share movements.

The FSA would not comment on its instructions from the CIA, but said that its team of specialists would do all they could to help the investigation. A spokesman said: The financial authorities have great expertise in this field and could have a big part to play. It is something that is incumbent upon us all to look at to the best of our ability.

Market regulators in Germany, Japan and the US received information of short selling of insurance company shares, airline stocks and shares in arms companies  all of which have fallen since the attack. Italian, French and Swiss regulators have also joined the investigation.

Munich Re, Swiss Re and Axa, all insurance companies, are also helping the authorities with the inquiries as large numbers of their shares were short-sold before the attack.

A spokesman for Axa, a French company, said: We have informed the market regulators in Paris that there are concerns about short selling.

Richard Crossley, an analyst at Teather & Greenwood, a City broker, said that he had tracked suspicious short selling and share dumping in a swath of stocks badly affected by the terrorist attacks.

He said that on the Friday before the attacks, more than 10 million shares in Merrill Lynch, the US investment bank, were sold compared with 4 million on a normal day. He added that exceptionally high volumes of retail and leisure stocks had also caught his attention.

Before the attacks there was no pattern to this phenomenon, he said. The shares that were sold were doing very well and someone was selling them in very large quantities with no real reason.

Mr Crossley believes that someone with inside knowledge of the attacks could have been making money on its expected outcome for up to three weeks before the terrorists struck.