Siemens downgraded at Morgan Stanley; Statoil cut at Deutsche Bank
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares retreated on Monday, pulling back from sharp gains made in the wake of U.S. jobs data, as investors continued to sell shares in mining companies.
After ending Friday's session with a 2.7% gain, the pan-European Dow Jones Stoxx 600 index (ST:SXXP 246.48, -2.55, -1.02%) declined 1.1% to 246.26 on Monday.
The index is up 26.5% year-to-date, with some of that gain made on Friday when shares rallied in tandem with the U.S. dollar as investors welcomed signs of improvement in the world's largest economy.
However, the rise in the dollar meant that investors turned away from commodities, sending metal futures sharply lower. Metal futures slipped again on Monday, with gold down another $20.50 to $1,148.70 an ounce.
That move pressured shares of mining firms once more, with Xstrata (UK:XTA 1,044, -23.00, -2.16%) shares down 1.6% and Eurasian Natural Resources (UK:ENRC 888.00, -33.50, -3.64%) shares down 1.8%.
The U.K. FTSE 100 index (UK:UKX 5,269, -53.55, -1.01%) declined 1.1% to 5,262.03, the German DAX index (DX:DAX 5,766, -51.77, -0.89%) lost 1.1% to 5,756.50 and the French CAC-40 index (FR:PX1 3,811, -35.91, -0.93%) fell 1% to 3,808.57.
Asian shares were mixed and U.S. stock futures were weak with Dow Jones Industrial Average futures down 69 points.
Financials were also lower in Europe, with shares of Santander (ES:SAN 11.83, -0.13, -1.05%) (STD 17.70, +0.24, +1.37%) down 1.1% in Madrid and Irish Life and Permanent (IE:ILB 3.75, -0.05, -1.32%) shares down 5.3% in Dublin.
Irish Life shares gained sharply last week amid speculation that it could receive a bid from French insurance giant Axa (FR:CS 16.60, -0.02, -0.12%) , down 0.1%.
Industrial giant Siemens (DE:SIE 62.20, -0.91, -1.44%) (SI 94.04, -1.85, -1.93%) declined 1.9% after it was downgraded to equal-weight from overweight at Morgan Stanley, which said that the stock no longer looks cheap.
"While we remain convinced that industrial automation and health-care markets will turn in 2010 (and thus remain above guidance), losses in non-core operations are likely to continue to weigh on reported earnings and cash flow, offsetting any value created and upside to consensus," Morgan Stanley said in a note to clients.
The Norway-based oil and gas company was downgraded to sell from hold at Deutsche Bank, which cited the uncertain outlook for European gas markets.
Waste management company Shanks Group (UK:SKS 126.30, +36.02, +39.98%) surged 40% to 126 pence after saying that it has received a "highly preliminary and unsolicited approach" from a private equity company over a potential offer worth 135 pence per share. The group said that after discussions with its two largest shareholders, the board believes that a cash offer of 150 pence a share or more "would deliver an appropriate value to shareholders."
