UPDATE 1-Deutsche Bank sells N.American natgas book to Morgan Stanley -source

Thu Aug 21, 2014 12:46pm EDT

(Adds background on Morgan Stanley's purchase of Deutsche commodity businesses)

Aug 21 (Reuters) - Deutsche Bank has sold its North American natural gas trading book to Morgan Stanley , a source familiar with the deal said on Thursday.

Deutsche Bank and Morgan Stanley declined to comment.

The sale was first reported by energy news portal Sparkspread earlier on Thursday. The portal did not give a value for the deal, saying details were not immediately available.

Last month, Morgan Stanley bought Deutsche Bank's bulk commodities trading book in coal, iron ore and freight forward contracts.

The bulk commodities book was one of 17 put up for sale by Deutsche, Germany's largest bank and one of the top-five financial participants in commodities, as part of its decision to exit commodities trading because of toughening regulations and diminished profits.

The acquisition of the bulk commodities book was to broaden Morgan Stanley's customer base and make it the counterparty for structured transactions with a wide range of end users.

The expansion of its derivatives business comes at a time Morgan Stanley's physical business is drawing intense scrutiny from U.S. regulators and politicians concerned about the involvement of Wall Street banks in physical commodity markets. (Reporting by Barani Krishnan; Editing by Lisa Von Ahn and Steve Orlofsky)