EU agrees on 50-% Greek debt write-down, $1.4 billion rescue fund

European leaders have sealed a deal with euro zone banks to write down 50 per cent of their Greek debt holdings even as the 17-nation block pledged to raise their rescue fund to 1 trillion euros ($1.4 trillion), in a bid to revitalise Europe and ease the pain of the global economy.

The deal will help reduce €100 billion from the €350-billion Greek debt pile while offering it a €100-billion loan over the next three years. This will reduce effective debt of the troubled nation to around €150 billion.

The 10-hour-long Brussels summit intended to break the deadlock, however, has not worked out finer details of the rescue package.

"We took important decisions," EU president Herman Van Rompuy stated at the end of talks.

German Chancellor Angela Merkel and French President Nicolas Sarkozy closed ranks to strike a deal with the head of the EU banking lobby Charles Dallara.

While some details of the deal are yet to be worked out, Merkel said, a comprehensive package to avert the escalation of the crisis will be ready when the EU leaders convene again in three days.