Breaking News-RTRS-US SEC extends emergency short sale rule through Aug 12

WASHINGTON, July 29 (Reuters) - U.S. securities regulators have extended an emergency rule aimed at curbing abusive short selling in the stocks of 19 major financial firms, including mortgage giants Freddie Mac and Fannie Mae .

The Securities and Exchange Commission on Tuesday extended through Aug. 12 its temporary rule that is part of an agency crackdown on possible market manipulation that some blame for steep declines in the shares of financial companies.

The rule requires investors to borrow a stock before selling it short and to deliver the stock on the settlement date.

Short sellers arrange to borrow shares they consider overvalued and sell them in hopes of making profit when the price drops.

The rule applies to Lehman Brothers , Goldman Sachs , Merrill Lynch , Morgan Stanley , JPMorgan Chase & Co and Citigroup Inc , among others.