EDF stock slides for 2nd day as state sale rumours persist

PARIS Fri May 30, 2014 10:05am EDT

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PARIS May 30 (Reuters) - Shares in French state-controlled utility EDF slid more than 3 percent for a second day in a row as rumours persisted that the state would sell part of its 84.49 percent stake, despite repeated denials by the finance ministry.

On Thursday the shares fell 3.6 percent. At 25.74 euros at 1404 GMT on Friday, it was down 3.3 percent on the day and 6.6 percent from Tuesday's close, back to levels last seen in February.

"Despite the denials, the rumour refuses to die," a Paris-based trader said.

The BFM Business website on Friday quoted KBL Richelieu Gestion manager Pascal Bernachon as saying that a large French bank was testing the market about its interest in an offer of EDF shares.

On Tuesday, EDF stock first fell 2.5 percent after a union tract said the state planned a stake sale and then recovered following a categorical finance ministry denial.

EDF declined to comment.

French media cited speculation from maker players that the state might want to sell some of its EDF stock in order to raise funds to buy a stake in engineering group Alstom, which is the subject of a bid by General Electric.

"It would be a big mistake to sell EDF stock that yields 4.7 percent while the state borrows at 1.7 percent. If the state sells anything, it should be stocks that yield nothing, like Air France, or that have no strategic logic," a Paris-based trader said.

EDF shares are also weighed down by worries that a 5 percent increase in tariffs scheduled for this summer might be reviewed.

At a parliamentary hearing earlier this month, France's energy minister, Segolene Royal, restated her opposition to planned increases in power tariffs, saying she was looking at ways to reform a decree setting energy prices.

(Reporting by Alexandre Boksenbaum-Granier and Geert De Clercq; editing by Jane Baird)

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