European stocks fell on Tuesday on fresh anxieties stemming from the European debt crisis.

The Stoxx Europe 600 index fell 0.3 percent to end at 241.92. The German DAX declined 1.27 percent, the French CAC 40 dropped 0.68 percent and the Portuguese PSI-20 slumped 1.22 percent.

On Monday, ratings agency Standard and Poor's put the sovereign debt ratings of 15 Eurozone members on negative credit watch. This both reflects the weakness of countries like Italy and Spain and the growing threat to the triple A status of core members like Germany and France.

On Tuesday, S&P put the credit rating of Eurozone bailout fund European Financial Stability Facility on negative credit watch.

S&P's moves were prompted by their belief that systemic stresses in the Eurozone have risen in recent weeks to the extent that they now put downward pressure on the credit standing of the Eurozone as a whole.

Metro AG (ETR:MEO), a Germany-based international retailing giant, also weighed on investor sentiment. Its shares plunged nearly 14 percent after it issued a profit warning for 2011, citing negative currency effects and the increasingly noticeable effects of the sovereign debt crisis on the economic development and consumer confidence.

Metro AG served as a stark reminder to investors of the detrimental effect the sovereign debt crisis on the real economy.

S&P, in its press release of the negative credit watch move, stated there is a rising risk of economic recession in the Eurozone as a whole in 2012. It expects economic output to decline in Spain, Portugal and Greece for 2012. It assigns a 40 percent probability that the output would decline in the Eurozone as a whole.

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