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updated 12/5/2011 3:57:24 PM ET 2011-12-05T20:57:24

Standard & Poor's threatened Monday to downgrade the credit rating of 15 eurozone countries, piling pressure on the currency union's leaders to take radical steps to resolve their debt crisis at a summit later this week.

The decision to put 15 eurozone countries — including AAA-rating nations such as Germany and Luxembourg — on watch for a possible cut in their credit worthiness also threatens to throw the eurozone's bailout mechanism into disarray, since the rescue fund relies on those countries' stellar rating to cheaply raise money on the markets.

"Today's CreditWatch placements are prompted by our 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," S&P said in a statement shortly after markets closed in the United States.

The only two euro nations not put on credit watch were Cyprus, which was already under review, and Greece, which already holds the world's worst rating.

The announcement came only hours after French President Nicolas Sarkozy and German Chancellor Angela Merkel revealed sweeping plans to change the European Union treaties in an effort to keep tighter checks on overspending nations. The proposal is set to form the basis of discussions at a summit of EU leaders on Thursday and Friday that is expected to provide a blueprint for an exit from the crisis.

Europe's plan: Bold new steps, same old issues

While the Franco-German plan would tie the 17-eurozone nations closer together, a tighter union would likely also result in heavier financial burdens for the region's stronger economies, which have already put up billions of euros to rescue Greece, Ireland and Portugal.

Analysts also noted that the proposals did not foresee a clear roadmap on how to get the eurozone economies growing again and to reduce funding costs for struggling nations in the long-term.

S&P said a rising risk of another recession in the currency union was one of the reasons behind its decision.

But the rating agency also appeared skeptical of the Merkel-Sarkozy plan and the ability of the eurozone as a whole to agree on new measures to fight the debt crisis, citing "continuing disagreements among European policy makers on how to tackle the immediate market confidence crisis and, longer term, how to ensure greater economic, financial, and fiscal convergence among eurozone members."

Many analysts have called on the European Central Bank to intervene in debt markets to lower struggling countries' borrowing costs or the creation of eurobonds — debt backed by all 17 euro countries.

France and Germany, the eurozone's two largest economies which currently both have a AAA-rating, quickly came out against the S&P move.

"Germany and France reaffirm that the proposals they made jointly today will reinforce the governance of the euro area in order to foster stability, competitiveness and growth," they said in a joint statement. "France and Germany, in full solidarity, confirm their determination to take all the necessary measures, in liaison with their partners and the European institutions to ensure the stability of the euro area."

The euro fell after the S&P announcement, trading down 0.1 percent at $1.339 and trading in futures on the S&P 500 and Dow Jones Industrial Average turned negative.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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