The vacation is over for French President Nicolas Sarkozy, as he cut short a trip Wednesday and pledged to reduce his country's huge debts amid rising concerns over a cut to the national credit rating.
Bank stocks in France plunged Wednesday. In mid-afternoon trading on the Paris stock exchange, French bank Societe Generale's shares were down more than 20 percent at one point and BNP Paribas was down nearly 10 percent.
Since early July, Societe Generale's stock has lost more than half its value.
Sarkozy was vacationing in the French Riviera when he summoned key ministers for an emergency meeting as more analysts warned that France's debt rating could be cut. France is the world's fifth-largest economy.
The American economy, the world's largest, is facing fallout from Friday's downgrade from AAA, to AA+, by ratings agency Standard & Poor's. U.S. and global stock markets plummeted Monday on the downgrade news, and are down heavily again on Wednesday amid concerns over the weak global economy.
The U.S. downgrade raised fears that France could be the next to lose its AAA rating as it is forced to bail out weaker partners in the eurozone.
"The market is quite jittery, and France seems to be the next one on everyone's radar, hence there is selling in French banks," a London-based trader told The Telegraph.
Analysts are warning France that it can't continue bailing out other eurozone countries in financial distress when its own growth is slowing.
Sarkozy said he has asked Finance Minister Francois Baroin to prepare a list of measures to guarantee the government attains its deficit-reduction targets. He is to decide on which measures to implement at a meeting Aug. 24.
Sarkozy is calling for a constitutional change in France to require a balanced national budget.
But some worry his pledges are just words since France has failed for years to deliver on deficit-cutting promises.
"We will take the necessary measures to reach these goals," said Baroin.