Eurozone leaders will try to cut Greece’s outstanding debt to 120 per cent of gross domestic product by the end of the decade, but were struggling last night to pin down details of the private sector’s contribution.

The sharp reduction in Greek debt levels, announced by German chancellor Angela Merkel, would likely force bondholders to accept their debt payments cut in half, according to one analysis. Global lenders believe Athens is on track for its debt to peak at 186 per cent of GDP in 2013, compared with 83 per cent for Germany.

But officials were making little progress with bondholders in talks stretching into the evening. It appeared likely that negotiations would continue beyond the much-anticipated summit of eurozone leaders, who were gathering in Brussels in an effort to finalise a three-pronged plan to tackle the European sovereign debt crisis.