Unions argue that privatisations will weaken workers' rights

A 22% stake in Europe's third-largest gas company is being put up for sale to raise about 4bn euros (�2.7bn; $4.9bn).

Unions have opposed the sell off, one of three planned in the energy industry over the next 12 months, and there were a number of protests on Wednesday.

France is pressing ahead as it needs cash to cut its rising budget deficit.

French privatisation plans Electricite de France 100% state owned, with share sale planned for October Areva More than 92% of nuclear power firm is owned by state and other public entities, with share sale planned for 2006 Aeroports de Paris 100% state owned, with minority stake set for sale in 2006 Autoroutes du Sud de la France State owns more than half of the firm and plans to reduce its holding Autoroutes Paris Rhin Rhone State owns 70% and will cut holding Autoroutes du Nord et de l'Est de la France Almost 76% in French hands, stake to be sold in future Source: Reuters

It has already clashed with the European Union over the size of its spending shortfall, which must be kept under 3% of annual gross domestic product.

And earlier this week, Finance Minister Thierry Breton warned that the country was living beyond its means at the same time as he cut 2005 growth forecasts to 2% from an earlier target of 2.5%.

However, unions are against the share sale, complaining that it will pave the way for job cuts and the erosion of workers' rights.

Profit split

Under the terms of the share sale, France will sell as many 121.3 million state-held shares priced between 20.70 euros and 24 euros.

Gaz de France also will offer 80.9 million newly created shares as part of the overall deal, using the money to bolster its balance sheet.

The company wants to improve its finances as it looks to head off the challenge from energy giants such as Germany's E.ON and the UK's Centrica.

It's going to be a hit Jacques-Antoine Bretteil, International Capital Gestion

Early indications from investors is that demand for the Gaz de France offering will be strong, helping both the state and company hit their target.

"It's going to be a hit," said Jacques-Antoine Bretteil of International Capital Gestion.

France will keep an 80% stake in Gaz de France, but has parliamentary approval to sell as much as 30% of the company.