One of the largest parts of deal concern the Greek debt situation: it was agreed yesterday that banks holding the debt accepted a 50% loss, which means that the bailout fund will be increased, and that the banks will have raise more capital.

Shares on the European market rose quickly as news of the deal spread, as the announcement helped life the euro.

The agreement is dedicated to preventing the EU debt crisis spreading to larger eurozone economies, such as Italy, though EU leaders accept that more needs to be done.

They have agreed to increase the eurozone bailout fund to almost 1 trillion euros, and that banks must also raise more funds to protect them against any future government defaults. The framework for these pkans are due to be put in place in November.

Silvio Berlusconi promised to balance Italy’s budget and begin reforms to lower its 1.9 trillion debts.

The 17 leaders of the eurozone nations were in meetings since Wednesday attempting to come to a conclusion as to how to aid Greece, as well as searching for a way to underpin other economies, like Italy.

French President, Mr Sarkozy, said the believed that the agreement would be a relief for “the whole world”.

As the banks have agreed to accept 50% losses, Greece’s debt has been reduced to 120% of its GDP by 2020.

• Private banks holding Greek debt accept a 50% loss
• European Financial Stability Facility (EFSF) to be boosted to 1tn euros ($1.4tn:£880bn)
• Banks told to recapitalise by 106bn euros

The Greek Prime Minister, George Papandreou, praised the deal, saying, "We can claim that a new day has come for Greece, and not only for Greece but also for Europe."

Eurozone leaders also agreed to raise the bailout fund by 440 billion euros to 1 trillion euros.

Banks will now be required to raise another 106 billion euros in new capital by June 2012, but governments may have to intervene, despite the unpopularity of additional bank bail-outs.

German Chancellor, Angela Merkel, who was a key negotiator in the deal being decided, said, "I think we were able to meet expectations and we have done what needed doing" for the euro.