Siemens downgraded at Morgan Stanley; Statoil cut at Deutsche Bank By Sarah Turner, MarketWatch LONDON (MarketWatch) -- European shares retreated on Monday, as investors sold shares in companies that could be some of the most exposed to a change in U.S. interest rate policy. After ending Friday's session with a 2.7% gain, the pan-European Dow Jones Stoxx 600 index (ST:SXXP 247.47, -1.56, -0.63%) declined 0.6% to 247.53 on Monday, with banks and miners among the worst performers. The index is up 25% year-to-date, with some of that gain made on Friday when shares rallied in tandem with the dollar after the release of much stronger-than-expected U.S. jobs data. "The data was quite a revelation in that it suggests that there's a bit more strength to the recovery than had been expected," said Mike Lenhoff, chief strategist at brokerage Brewin Dolphin. "Markets will now be questioning what the Federal Reserve means by a period of extended low interest rates," he added. The rise in the dollar meant that investors turned away from commodities, sending metal futures sharply lower on Friday and again on Monday. Read more on metals. That move pressured mining shares, with Xstrata (UK:XTA 1,045, -20.00, -1.88%) down 1.4% and Eurasian Natural Resources (UK:ENRC 890.50, -30.50, -3.31%) shares down 3%. On a regional level, the U.K. FTSE 100 index (UK:UKX 5,297, -24.95, -0.47%) declined 0.5% to 5,296.01, the German DAX index (DX:DAX 5,788, -29.40, -0.51%) lost 0.5% to 5,786.91 and the French CAC-40 index (FR:PX1 3,834, -13.04, -0.34%) fell 0.3% to 3,834.88. Asian shares ended mixed and U.S. stock futures were weak with Dow Jones Industrial Average futures down 32 points. The Greek ASE Composite index fell 2.4% to 2,326.92 as police and protesters clashed in Athens overnight amid the first anniversary of the fatal police shooting of a teenager. Greek banks were particularly hard-hit on Monday, with National Bank of Greece (NBG 6.32, -0.05, -0.78%) down 3.7%. Financials were lower across the rest of Europe as well, with shares of HSBC Holdings (UK:HSBA 714.00, -9.60, -1.33%) (HBC 59.92, +0.12, +0.20%) down 1.4% and Credit Suisse (CH:CSGN 52.75, -0.40, -0.75%) (CS 52.71, +0.21, +0.40%) shares also down 1.4%. "I think that the move in banking sector reflects the prospects for short-term increases in rates. Banks probably will have to pay more in terms of deposits and the spread between the short and the long end is expected to narrow," said Lenhoff. "On the other hand, improving news on the economic backdrop means that there's less risk of bad debts. People are not clear about the implications [of the jobs data] and until this happens we could see more volatility and more buying of defensive firms rather than banks and cyclicals," he added. One cyclical firm trading lower -- industrial giant Siemens (DE:SIE 62.34, -0.77, -1.22%) (SI 94.05, -1.84, -1.92%) -- declined 2% 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. In the oil and gas sector Statoil (STO 25.00, +0.10, +0.40%) (NO:STL 141.60, -1.70, -1.19%) shares were down 1.4%. 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. British waste management company Shanks Group (UK:SKS 126.60, +36.59, +40.61%) surged 41.2% to 127 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."

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