Eurozone leaders set for crunch debt summit

Policymakers will discuss a range of measures, including a new loan package to Greece and the role of private investors in any debt restructuring.

Reports suggest a new tax on banks will also be debated.

But German Chancellor Angela Merkel has cautioned against over optimism.

Greece received its first aid package in May last year, but the debt crisis continues to undermine confidence in global financial markets, with some commentators suggesting it threatens the future of the euro itself.

Politicians and investors are calling for decisive action to help bring the crisis to an end.

"Nobody should be under any illusion; the situation is very serious," European Commission President Jose Manuel Barroso said on Wednesday.

"It requires a response. Otherwise, the negative consequences will be felt in all corners of Europe and beyond."

The Governor of the Bank of England, Sir Mervyn King, has said that the crisis in the eurozone posed the most serious and immediate risk to the UK's financial system.

President Barack Obama has also weighed in, calling Mrs Merkel on Tuesday night to stress the importance of tackling the debt crisis in sustaining the global economic recovery.

The International Monetary Fund has also called on European leaders to take swift and decisive action.

Delaying such action further would be "very costly" for the world economy, it said.

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