MW: European shares stage retreat as miners and banks weigh
Siemens downgraded at Morgan Stanley; Statoil cut at Deutsche Bank
By Sarah Turner, MarketWatch
LONDON (MarketWatch) -- European shares lost ground on Monday, as another tumble for metals futures weighed on mining shares and banks fell after the release of stronger-than-expected U.S. jobs data for November.
After ending Friday's session with a 2.7% gain, the pan-European Dow Jones Stoxx 600 index (ST:SXXP 247.44, -1.59, -0.64%) declined 0.6% to 247.53 on Monday.
The Stoxx 600 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 jobs data were released.
"Confidence in the recovery may grow from here, and with that people might take a different view on the prospects for the dollar," said Mike Lenhoff, chief strategist at brokerage Brewin Dolphin.
The dollar continued to advance against the euro and sterling on Monday and investors turned away from commodities once more, sending gold futures down another $27.90 to $1,141.60 an ounce. That move pressured mining shares, with Xstrata (UK:XTA 1,044, -22.00, -2.06%) down 2.2% and Eurasian Natural Resources (UK:ENRC 891.50, -29.50, -3.20%) shares down 3.4%. Read more on metals.
On a regional level, the U.K. FTSE 100 index (UK:UKX 5,297, -24.89, -0.47%) declined 0.6% to 5,290.66, the German DAX index (DX:DAX 5,790, -27.47, -0.47%) lost 0.6% to 5,783.25 and the French CAC-40 index (FR:PX1 3,834, -12.18, -0.32%) fell 0.4% to 3,829.56.
Asian shares ended mixed and U.S. stock futures were weak with Dow Jones Industrial Average futures down 38 points. See Indications.
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 6.15, -0.17, -2.69%) down 3.7%.
Financials were lower across the rest of Europe as well, with shares of HSBC Holdings (UK:HSBA 713.60, -10.10, -1.40%) (HBC 58.65, -1.27, -2.12%) down 1.4% and Credit Suisse (CH:CSGN 52.95, -0.20, -0.38%) (CS 51.70, -1.01, -1.92%) shares also down 1.4%.
"I think that the move in the 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.
Away from banks, industrial giant Siemens (DE:SIE 62.18, -0.93, -1.47%) (SI 92.16, -1.88, -1.10%) 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 24.75, -0.25, -1.00%) (NO:STL 141.60, -1.80, -1.26%) shares were down 1.4%.
The Norway 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 126.13, +36.19, +40.17%) surged 41% to 127 pence after saying that it has received a "highly preliminary and unsolicited approach" from a private-equity company over a potential offer valued at 135 pence a 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."
