European leaders agree on long-term union

European leaders have agreed to use the continent's permanent bailout fund to recapitalize struggling banks, and agreed to the idea of a tighter union in the long term.

The bank decision at overnight meetings in Brussels on Friday was aimed at helping Spain, which sought a €100 billion rescue to help its troubled banks and is facing rising borrowing costs.

EU President Herman Van Rompuy called it a "breakthrough that banks can be recapitalized directly."

He said leaders of the 17-nation eurozone also agreed to a joint banking supervisory body.

He said the leaders of the full 27-member European Union agreed to a general long-term plan for a tighter budgetary and political union.