European markets fell Monday as investor confidence was weighed down by concerns that the debt crisis faced by the euro zone is intensifying amid disagreement between Germany and France.

The French CAC 40 index was down 0.71 percent or 25.21 points to 3505.51.  Shares of Vinci SA fell 1.84 percent and those of ArcelorMittal dropped 1.82 percent.

London’s FTSE 100 index fell 0.40 percent or 23.42 points to 5829.20. Shares of Evraz Plc declined 2.72 percent and those of Kazakhmys Plc dropped 1.10 percent.

The German DAX 30 index declined 0.38 percent or, 28.23 points to 7423.39. Shares of Commerzbank AG fell 1.97 percent and shares of Deutsche Bank AG dropped 1.13 percent.

Spain's IBEX 35 was down 0.69 percent or 56.50 points to 8174.20. Shares of Bankia SA fell 1.94 percent and those of Telefonica SA dropped 1.32 percent.

Market sentiment turned negative to know that disagreement continued to prevail between Germany and France over the formation of a banking union as part of the measures to overcome the debt burden faced by the euro zone.

During their meeting at Ludwigsburg in Germany Sunday, German Chancellor Angela Merkel and French President Francois Hollande gave statements which clearly brought forward the discord between the two countries over the plan to have a banking union.

Stressing that he supported a banking union, Hollande pointed out that its structure should be prepared at the earliest. However, Merkel made it clear that she was against doing anything very quickly. She stood for taking time to make sure that the banking union had a framework which could deliver good quality results.

“The euphoria emanating from recent Fed, ECB and BoJ actions is fading quickly. The reality of weak growth and underlying structural tensions is coming back to haunt markets,” Credit Agricole said in a note.

The lack of announcement on Spain's decision on whether to seek help from the newly declared bond-buying program by the European Central Bank is affecting the investor sentiment. Investors are expected to focus on Spain this week with the Spanish government presenting both its structural reforms and 2013 budget plan Thursday.

Market players expect that policy measures represent a good opportunity to pave the way for a rescue program with the ECB support. Market participants hope that Spain will ask for a bailout under the enhanced conditions credit line, which will trigger the bond purchasing operation by the ECB.