** Shares of U.S. refiner Phillips 66 PSX.N down 1.3% at $123.06

** Company says it will sell 65% of its stake in its German and Austrian fuel retail business to a consortium led by Energy Equation Partners and Stonepeak in deal valuing the unit at $2.8 billion

** PSX expects to receive about $1.6 billion in pre-tax cash from the sale

** Company plans to use proceeds from the sale to reduce debt and boost shareholder returns

** PSX says it will retain 35% non-operating interest in the business

** TD Cowen analysts say the partial sale missed expectations of a full sale, while PSX only received ~60% cash proceeds for 65% of the asset

** "These lower cash inflows will likely outweigh the better multiple (we had 8x) given investor focus on balance sheet"- TD Cowen

** PSX stock is also pressured by over a 2% dip in crude oil prices O/R

** Including session's moves, shares are up 8% YTD

(Reporting by Katha Kalia in Bengaluru)

((Katha.Kalia@thomsonreuters.com))