Eurozone finance ministers have agreed to offer Spain €30 billion to help its troubled banks.
After nine hours of emergency talks in Brussels that ended early on Tuesday morning, the ministers said the money would be available by the end of July and total support could reach €100 billion.
It was also agreed that a 2013 deadline for Spain to cut its budget deficit to the European Union limit of 3% could be extended by one year, the BBC reports.
There have been fears that Spanish banks could lead the country to ask for a full state bailout. Its debt exceeds the combined liabilities of Greece, Portugal and the Republic of Ireland.
Ministers agreed that once a single European banking supervisor is set up next year, Spanish banks could be recapitalised directly by eurozone rescue funds without any state guarantee adding to the national debt burden.
Officials say the ministers will return to Brussels by 20 July to formally sign the agreement.
The yield on Spanish bonds rose sharply ahead of the meeting, with many fearing that little concrete action on the banks would be taken.
