European leaders have reached an agreement with banks to take a 50 percent loss on Greek bonds as part of efforts to contain the eurozone crisis.

European Union President Herman Van Rompuy said the deal will reduce Greece's debt to 120 percent of its gross domestic product in 2020. Greek Prime Minister George Papandreou said the deal means his country's debt is now sustainable.

They spoke early Thursday, after marathon talks in Brussels on the Greek debt crisis.

Van Rompuy said eurozone leaders and the International Monetary Fund agreed to give Greece another $140 billion dollars in loans. Eurozone leaders also said major European banks would have to raise close to $150 billion to recapitalize.

EU leaders also plan to increase the eurozone bailout fund to $1.4 trillion.

The European heads of state are attempting to resolve a two-year-long debt crisis that in recent weeks has roiled international financial markets fearful of a Greek default on its obligations, and the spread of the debt contagion to bigger European economies in Italy and Spain.

While the immediate focus has been on debt-ridden Greece, German Chancellor Angela Merkel and French President Nicolas Sarkozy pressed Italian Prime Minister Silvio Berlusconi to move faster to adopt new economic reforms to stave off the need for an Italian bailout.