In a marathon summit, European leaders clinched a deal they hope will turn the tide in a two-year-long debt crisis.
"We have reached an agreement, which I believe lets us give a credible and ambitious and overall response to the Greek crisis," French President Nicolas Sarkozy told reporters after the meeting ended early Thursday.
"Because of the complexity of the issues at stake, it took us a full night," he said. "But the results will be a source of huge relief worldwide."
The deal came amid immense pressure to craft a strategy designed to prevent the debt crisis from pushing Europe back into recession. EU leaders also needed to guard against their currency union from falling apart.
Global markets rallied Thursday on news of the agreement.
The deal includes a significant reduction of Greece's debts, shoring up Europe's banks, and adding money to a bailout fund.
The goal of the fund is to prevent larger economies like Italy and Spain from being dragged into the financial crisis.
After the summit, Sarkozy said a Greek default was not an option and that the "the private sector has written off half of Greece's debt that it holds."
The Institute of International Finance said the cut in Greece's debts amounts to 100 billion euros, or $139 billion, for a second rescue.
Christine Lagarde, managing director of the International Monetary Fund, said the negotiations had been tough but worth it.
"What we have at the end of the day is a comprehensive plan which includes all the ingredients," she said.
U.S. leaders emphasized the importance of Europe dealing with its debt crisis for the health of the U.S. economy.
"Let me emphasize that the successful resolution of the current European crisis matters deeply to us here in the United States because our country has no bigger, no more important economic relationship than we have with Europe," Assistant Treasury Secretary Charles Collyns said.
The European Central Bank president said the new strategy should be "fully implemented as rapidly and effectively as possible."