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Brussels blog by some wire service journalists

Draft deal for Greece includes fund overhaul to stop spread of debt crisis

By GABRIELE STEINHAUSER

BRUSSELS (AP) _ Eurozone leaders were preparing a radical overhaul of their bailout fund and new loans for Greece on Thursday to keep panic from spreading on financial markets, according to a draft summit statement.

Markets cheered the news, with stocks, bonds and the euro rallying sharply on hopes that a deal in Brussels might prove a turning point in the 18 month-long crisis.

The document, which seen by the Associated Press, says that banks and other private creditors have agreed to voluntarily contribute to a second rescue package for Greece through various options.

The draft does not spell out the options, but officials have so far been discussing asking banks to swap or roll over their old bonds for new ones with longer maturities or buying back Greek bonds at the current, low market prices.

Private sector involvement will come with some form of guarantees that will keep Greek banks from being cut off emergency support by the European Central Bank.

READ FULL STORY HERE.

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