After six months of tortuous negotiations Greece has been thrown a debt lifeline by its European creditors.

Details of the new debt agreement are yet to be announced, but have been confirmed by senior Eurozone finance ministers on Twitter.

European stockmarkets rallied after news of the deal was broken by Donald Tusk, president of the European Council.

EuroSummit has unanimously reached agreement. All ready to go for ESM programme for #Greece with serious reforms & financial support

— Donald Tusk (@eucopresident) July 13, 2015

In early trading the German and French sharemarkets rose 1.5 per cent.

The Euro is also rallying against most major currencies, except the British pound.

To secure the deal, Greek Prime Minister Alexis Tsipras has agreed to cut pensions and has given an undertaking to begin privatising state-owned assets.

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The cave-in is set to fracture the socialist government, amid Greek newspaper reports that Mr Tsipras is likely to form a national unity government drawing support from centrist parties.

Greece paralysed

The stand-off over a new debt bailout has paralysed the Greek banking system in the past two weeks and severely disrupted the commercial and social fabric of the country.

The freezing of banking services has caused serious shortages of medicines in pharmacies across the country and prevented the importation of meat and other foodstuffs by supermarket chains.

Greece’s largest industry – tourism – has also taken a big hit, with holiday makers abandoning stays in the Aegean Islands because of problems accessing cash.