LIVE MARKETS-What we're watching at the open

Welcome to the home for real-time coverage of European equity markets brought to you by Reuters stocks reporters and anchored today by Thyagaraju Adinarayan. Reach him on Messenger to share your thoughts on market moves: thyagaraju.adinarayan.thomsonreuters.com@reuters.net

WHAT WE'RE WATCHING AT THE OPEN (0655 GMT)

Stock futures are pointing to a flat to slightly negative open as investors stick to the sidelines ahead of the ECB's monetary policy meeting on Thursday, where the central bank is widely expected to come up with a string of easing measures. All the major stock futures are down 0.1%.

Yesterday's euro-zone bank stocks' rally (+2.2%) showed investors had high expectations for ECB governor Draghi to deliver a stimulus package that would help the bloc's ailing economy to spring back to growth.

European tech stocks, especially the software names such as SAP, Temenos, Software AG, among others in focus after yesterday's rout in software stocks in the U.S. Meanwhile, UK's Sage is seen up 1% after the company said it's looking at options, including a sale, for its payments unit.

More woes for the autos sector: Moody's downgraded Ford's bonds to junk rating citing the "considerable operating, competitive, and market challenges facing the company, and the resulting pressure on its earnings and cash generation measures."

UK housebuilders could see some action after Britain's Galliford Try said it had restarted preliminary talks with Bovis Homes to combine their housing businesses. One dealer reckons Galliford could rise as much as 10% while Bovis may come under pressure.

Barclays shares are seen down 1%-2% after it raised the money it set aside for the mis-selling of payment protection insurance (PPI), hot on the heels of similar moves by Lloyds and RBS in recent days.

In Spain, banks are bracing for a preliminary ruling from the European Court of Justice on Tuesday on whether they charged some customers too much for mortgages, a decision which could eventually lead to them paying out billions of euros in compensation.

Keep tabs on Caixabank, Bankia, Santander and BBVA.

Richemont shares, which have had a decent run recently, could come under pressure after the luxury goods maker's head of fashion & accessories stepped down for personal reasons.

In earnings, JD Sports is seen up 3% after in-line results; Ashtead down 1% on in-line results as traders see this as opportunity for profit taking; Switzerland's Partners Group seen falling 2% on first-half revenue miss.

Key headlines:

Lloyds and Barclays hit by $4 bln insurance mis-selling claims

UK's Sage Group considers sale of its payment processing unit

SAP chief says German headquarters an advantage amid U.S.-China trade war [nL2N26101G

Deutsche's overhaul is hitting investment bank revenue less than expected - CFO

Bovis Homes, Galliford restart talks to combine housing units

Santander to increase its Mexican business ownership to 91.6%

ProSiebenSat. 1 is doubling down on its free-to-air model - FT

Spanish banks on edge for European ruling on mortgage pricing

JD Sports defies weak UK high street with profit rise

(Thyagaraju Adinarayan)

*****

EUROPEAN STOCKS SEEN OPENING SLIGHTLY LOWER (0531 GMT)

European stocks are seen opening slightly lower as weak China data and tech stocks sell off in the U.S. brought back fears of a global economic slowdown offsetting optimism from rising expectations of a stimulus package from the ECB later this week.

Asian stocks were on the backfoot after data showed China mainland factory prices were shrinking at their fastest pace in three years as flagging demand at home and abroad is forcing some businesses to slash prices.

Financial spreadbetters IG expect London's FTSE to open 9 points lower at 7,227, Frankfurt's DAX to open 14 points lower at 12,212, and Paris' CAC to open 3 points lower at 5,586.

Meanwhile, German bund yields hit a one-month high on Tuesday following a report by Reuters that Germany is considering a "shadow budget" to allow the government to circumvent its strict national debt rules.

(Thyagaraju Adinarayan)

***** (Reporting by Danilo Masoni, Josephine Mason and Thyagaraju Adinarayan)