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By Ron Bousso
LONDON, July 10 (Reuters) - Royal Dutch Shell hasacquired Morgan Stanley's European gas and power tradingbook as the U.S. bank continues its exit from the sector.
Shell is set to significantly increase its footprint in thegas market in the coming years if it completes its proposed $70billion acquisition of smaller British rival BG Group andas part of a growing strategic alliance with Russia's Gazprom,the world's top gas producer.
Shell Energy Europe, its supply and trading arm in theregion, has signed a binding sales and purchase agreement forMorgan Stanley's portfolio, the Anglo-Dutch company said onFriday, without providing further details.
The deal includes only Morgan's trading book and no staff,according to several sources.
"Comprising predominantly physical and financial gas andpower trades, the deal further expands Shell's activities incore energy markets across Europe," Shell said in a statement.
Morgan Stanley, once one of the most powerful Wall Streetbanks in commodities trading, has drastically reduced itsexposure in the sector due to regulations limiting banks'proprietary trading in markets such as oil or metals.
The bank has sold its oil trading business to Castletonafter its deal with Russia's Rosneft collapsed due toWestern sanctions on Russia. Morgan's liquefied natural gas(LNG) team left for Glencore.
Shell's shares were up 1.4 percent at 0940 GMT, in line withthe European oil and gas index.
(Additional reporting by Dmitry Zhdannikov; editing by DavidClarke and William Hardy)