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Fear and hope continue to trade places in European financial markets. Today's trading included both.

European stocks were down in early trading but by midmorning they were rising only to retreat once again nearing the close. Rising hopes that Spain will soon request a long-awaited bailout had buoyed European shares earlier today.

The Stoxx Europe 600 index closed down 0.3% to 271.62 on Tuesday. European stocks retreated after Spain's prime minister said a request for a bailout was not imminent. Spanish government bonds advanced as yields retreated to around 5.75% for the 10-year bond and 3.17% for 2-year debt. Moody's is currently reviewing Spain's credit rating.

The big question for investors is when will Spain make that request. Analysts were expecting an announcement this week; now some say Spain is more likely to make a request next week.

"At the end of the day, in one form or another, Spain will have to default and Greece will default again," says John Mauldin, president of Millennium Wave Advisors and author of Endgame. "Spain's debt and interest carry cost are rising significantly faster than GDP."

As for Greece, the troika of debt inspectors for Greece--the European Commission, the International Monetary Fund and the ECB—recently rejected a big chunk (as much as €2 billion or $2.57 billion) of the country's austerity plan, according to The Wall Street Journal, citing a finance ministry official. The troika has to approve an austerity plan before Greece can qualify for the next installment of bailout funds.

Time is running out. The jobless rate in both Spain and Greece has risen above 20%. The eurozone unemployment rate hit a record high of 11.4% in August.

Mauldin says France could be the next European economy to fall and possibly the most problemmatic. "France is a bridge too far for Germany," Mauldin says.