France and Germany are working on a plan to prevent the European debt crisis from getting worse.

The new strategy would impose more budget discipline for eurozone countries, forcing them to shrink the debts that started the crisis.

Reaching an agreement among the 17 eurozone countries may prove to be difficult. Still, international financial markets rallied strong on the news of the plan.

"While positive news provides a welcome relief for the markets, it cannot detract from the fact that the future of the eurozone is hanging in the balance," Jane Foley, an analyst at Rabobank International, said.

Despite renewed efforts to reach an agreement, credit rating agency Moody's issued a warning Monday saying the "rapid escalation" of Europe's financial crisis is threatening the credit-worthiness of all eurozone governments, even the most highly rated.

Only six of the eurozone's countries have the high rating including Germany, France, Austria, the Netherlands, Luxembourg, and Finland.