European Markets Fall As Investors Remain Watchful

The French CAC 40 index was down 0.30 percent or 10.48 point to 3443.23. Shares of Danone SA dropped 0.40 percent and shares of Lafarge SA fell 0.35 percent.

London’s FTSE 100 index dropped 0.31 percent or 18.07 points to 5740.34. Shares of Barclays PLC fell 1.44 percent and shares of Vodafone Group PLC declined 1.12 percent.

The German DAX 30 index fell 0.19 percent or 13.39 points to 7001.44. Shares of Adidads AG dropped 0.70 percent and shares of Siemens AG declined 0.22 percent.

Spain's IBEX 35 was up 0.27 percent or 20 points to 7454.20. Shares of Bankia SA rose 3.94 percent and shares of Acerinox SA advanced 1.77 percent.

Market players are awaiting an announcement of the stimulus measures by the European Central Bank (ECB) as investors feel that bold measures, including easing in the monetary policy, will give the much-needed thrust to boost liquidity in the euro zone financial system. Investors will be focusing on the ECB meeting Thursday in Frankfurt.

ECB President Mario Draghi’s pledge in July to "do whatever it takes" to save the euro has not yet been translated into action. Investors feel that bold measures from the ECB, including easing in the monetary policy, are urgently needed to boost liquidity in the global financial system. A re-launch of the ECB's bond-buying program is the absolute minimum to be expected.

European Union President Herman Van Rompuy will meet German Chancellor Angela Merkel in Berlin Tuesday. They are expected to discuss measures to overcome the current debt crisis and the steps necessary to stabilize the euro zone.

French President Francois Hollande will meet Italian Prime Minister Mario Monti in Rome Tuesday. They are expected to address the sovereign debt crisis and measures to combat the situation. Investors are looking forward to the outcome of the meeting.

Meanwhile, Moody's has downgraded the European Union's outlook to negative from stable. But it maintained the long-term and medium-term bond ratings at Aaa.