BRUSSELS - After more than 12 hours of talks, the countries that use the euro agreed early Tuesday to hand Greece euro130 billion ($170 billion) in further bailout loans to save it from a potentially calamitous default, an EU diplomat said.
The euro surged as the news broke, climbing 0.7 percent to $1.328 in minutes.
The deal — details of which were still being worked out by European finance ministers in an all-night session in Brussels — was expected to bring Greece's debt down to 120.5 percent of GDP by 2020, according to the official. That's around the maximum that the International Monetary Fund and the eurozone considered sustainable. Some eurozone ministers had indicated before the meeting that they would not accept a deal that didn't put Greece's debt on a sustainable path.
The official spoke on condition of anonymity because a formal announcement was pending.
The deal should also give the green light to a related debt relief from private investors, who are expected to take significant losses on Greek bonds they hold.
Greece desperately needs another rescue package if it is to avoid default next month when a euro14.5 billion bond issue comes due.