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European Stocks Set to Drop on Wall Street's Losses

European equities were poised to add to recent steep losses on Monday, tracking a drop in Asian shares as the prospect of a U.S. recession continued to rattle investors worldwide.

Financial bookmakers, or spread betters, in London expected Britain's FTSE 100 index to open between 34 and 52 points lower, or down as much as 1 percent, the German DAX 12 to 37 points lower, down as much as 0.5 percent and the French CAC 40 20 to 30 points lower, down as much as 0.6 percent.

Trading in Europe could be muted as U.S. markets will be closed for the day for the Martin Luther King Day holiday.

"The week starts on a quiet footing with the U.S. markets closed in observance of Martin Luther King Day but with stock market confidence still failing to find any traction," Bear Stearns analysts wrote in a note.

European stocks ended lower on Friday, dropping for the tenth time in 13 sessions as banks and insurers took a beating on renewed worries over mortgage-related losses, while investors gave a cold reception to a U.S. economic-stimulus package.

The FTSEurofirst 300 index of top European shares ended the rocky session down 1.2 percent, at 1,358.51, capping a dismal week during which it lost 4.8 percent.