Leaders from the 17 countries sharing the euro sealed a dramatic deal Friday to direct emergency measures at crisis-hit Italy and Spain and boost the embattled economy, sending markets sharply upwards.
The accord paves the way for the eurozone's 500-billion-euro (US$630 billion) bailout fund to recapitalise ailing banks directly, without passing through national budgets and adding to struggling countries' debt mountains.
Another key measure agreed was that eurozone bailout funds would be used 'in a flexible and efficient manner in order to stabilise markets' - a reference to buying countries' bonds to drive down high borrowing costs that in recent weeks have crippled Spain and Italy.
EU leaders also agreed a package of measures worth some EUR120 billion they hope will bolster growth in the recession-hit bloc.
They pledged to boost the capital of the European Investment Bank by EUR10 billion in order to increase its overall lending capacity by 60 billion and help vulnerable countries 'grow themselves out of the crisis.'
Another EUR55 billion is to be scraped together from unused EU funds and earmarked for small- and medium-sized enterprises and youth employment schemes, the EU chief said.
The summit, which continues later on Friday, was being scrutinised both by jittery financial markets and world leaders, as the eurozone battles to solve a two and a half year debt crisis endangering the global economy.
In a longer-term perspective, EU leaders also agreed on a tentative 'roadmap' for the future shape of the eurozone that could include a banking union and a budgetary union.