Moody's, the ratings agency, issued a warning to France last night that it could face the loss of its coveted status as one of the world's most creditworthy nations after saying the euro debt crisis and slowing world economy left the country's AAA rating under pressure.

It said that while the French economy remained able to absorb normal shocks, "the government's financial strength has weakened, as it has for other euro area sovereigns, because the global financial and economic crisis."

The warning will come as a shock to many in France and is likely to unnerve markets already anxious at the prospect of the euro debt crisis spreading to the US and Asia.

Germany's finance minister, Wolfgang Schäuble, added to the uncertainty earlier in the day when he said detailed talks to solve the crisis were likely to go beyond a self-imposed deadline set for this weekend.

He also hinted that a rescue deal will fall short of the "big bazooka" that markets believe is needed to prevent the currency club breaking up.

Schäuble said a final package would not be in place until the G20 world leaders' summit in Cannes next month. His comments dismayed investors concerned that Berlin and Paris have failed to grasp the magnitude of the eurozone's debt crisis.

Stock markets in London, Paris and Frankfurt fell, while in New York the Dow Jones industrial average plummeted 247 points by the close of trading. A two-month flight of cash from European banks accelerated, according to analysts, while fears grew earlier that ratings agencies were poised to downgrade French sovereign bonds, increasing the difference between France's borrowing costs and those of Germany to the highest level since 1995.

Oil prices, which had steadied after recent falls, turned downwards again and the euro fell against the dollar as investors sought safe havens.

David Jones, chief market strategist at IG Index, said: "German officials clearly decided that a degree of expectation management was needed, and a statement was made warning that if anyone expected a package to be in place by next Monday then they were setting themselves up for disappointment."

Markets were at fever pitch after the French president, Nicolas Sarkozy, and German chancellor, Angela Merkel, said at the weekend that they would reveal a rescue plan this Sunday at a crucial European council meeting.

The US treasury secretary, Tim Geithner, warned at the weekend it was crucial to agree a package of measures that would reassure markets and end 18 months of wrangling over how to deal with Greek debts.

EU policymakers are due to meet this weekend in Brussels ahead of the G20 conference in Cannes on 4 November hosted by Sarkozy. The chancellor, George Osborne, said the Cannes meeting would be crucial in determining whether the global economy could maintain growth. "The biggest boost to growth across the world – and for Britain – would be a resolution to the crisis in the eurozone. Maintaining the momentum towards that will be the focus of my discussion with my international counterparts."

Britain has ruled out participating directly in funding any scheme, though it is likely to become involved in a broader backstop plan put forward by the International Monetary Fund.

Andrew Tyrie, the Conservative party chair of the Treasury select committee, said British taxpayers would object to involvement in a bailout for Greece. "There should be no mistaking how strong opposition would be both in parliament and in the country at large to British participation in a bailout," he said.

Schäuble, speaking at a meeting in London, appeared to back away from his leaders' assurance that the European council meeting in Brussels was make or break. He hinted that markets may need to wait longer before the talks were completed.

He has placed a transaction tax on derivatives trading at the centre of proposed reforms, along with a series of measures to calm market volatility, discourage excessive borrowing and persuade citizens protesting in European capitals that politicians are aware of their concerns.

He laid out a four-point plan that Germany believes will resolve the situation and create a sustainable future for Greece and the rest of the eurozone. He said a bailout deal involved:

• Securing systemically important banks with increased capital.

• Enhancing the European Financial Stability Facility "in a flexible way that is most efficient".

• Finding a sustainable solution for Greece.

• Establishing better governance for the eurozone.

Nick Parsons, head of research at National Australia Bank, said: "The impression he gave was that solutions to the European sovereign debt crisis would be found and they would be workable if properly enforced.

"However, his strong insistence on bank recapitalisation and a restructuring of Greek debt suggests this will not be a painless or a quick outcome. More importantly, he is defending the German approach to the debt crisis and is very robust when talking about the failings of financial markets and the need for fresh regulation.

"As we saw in successive ERM [exchange rate mechanism] crises 20 years ago, Germans are not afraid to voice their opinions forcefully and back them with action. In my opinion, markets may be underestimating their determination now to impose fresh rules, regulations and policies which will be friendly neither to bond investors or shareholders."