Financial markets soar as eurozone leaders strike deal on €109 billion Greek bailout

Speaking at the end of a 10 hour-long meeting with 16 other heads of State and governments from the eurozone, Gonzi said, that the deal reached in Brussels, was different from the first bailout to Greece and that the new aid package to Greece would be given through the European Financial Stability Fund and not through bilateral loans.

Malta, he said, would not be making any further advances than what was agreed in the first bailout, and that the guarantees already given to the EFSF (in excess of €400m) were not being increased.

The agreement, the Prime Minister said, had sent a positive message to the financial markets and had confirmed the strength of the European currency.

Addressing a press conference at the end of the meeting, EU President Herman Von Rompuy said: "We reached agreement on a new assistance program to fully cover the financing gap and to be financed by both the EU and the IMF,"

The private finance sector agreed to provide €50 billion of funding which will be added to €109 billion from European governments and the International Monetary Fund, according the summit's final statement.

"This programme will be designed, notably through lower interest rates and extended maturities, to decisively improve the debt sustainability and refinancing profile of Greece," it said.

"The financial sector has indicated its willingness to support Greece on a voluntary basis," -- a crucial point for how the agreement is viewed by markets, which could view the deal as an effective debt default by Greece.

The package "creates a sustainable path for Greece ... a lightening of the burden on the Greek people," said Greek Prime Minister George Papandreou. Greece has debts of €350 billion).

European Central Bank chief Jean-Claude Trichet hailed the agreement as a "crucial" step and one which would not trigger a "credit event," activating creditor loss insurance instruments.

He declined to "prejudge" whether it would amount to a default.

To ease Greece's debt repayments on its emergency loans, the summit agreed to extend them from 7.5 years to as much as 30 years in some cases, at a rate of 3.5 percent.

"The only thing we're asking for is the right to make deep changes in our country to make our country a viable one, one of growth and jobs creation," said Papandreou. "This is a European success, a European package."

A breakthrough became possible after the eurozone's two powerbrokers, German Chancellor Angela Merkel and French President Nicolas Sarkozy, reached a compromise just hours before the summit.

Leaders dropped the idea of a bank tax to help fund a second Greek bailout but kept German demands for private sector involvement, even at the risk of triggering a default.

There are concerns that any change to the terms of outstanding Greek sovereign bonds could prompt rating agencies to declare Athens in default, with potentially dramatic knock-on consequences.

The European Union and IMF's €110 billion bailout to Greece last year has proved insufficient and since then, Ireland and Portugal have received their own multi-billion-euro rescues.

Stock markets and the euro shot up on earlier draft details that the eurozone was preparing to make fresh loans and bring in the private sector to relieve Greece from its debt crisis.