Monti wins fight for EU help with borrowing costs Italy and Spain can get rescue funds to support bonds

(ANSA) - Brussels, June 29 - Italian Premier Mario Monti and his Spanish counterpart Mariano Rajoy won their battle to have European Union rescue funds used to reduce their borrowing costs when necessary at a crunch summit on the eurozone crisis on Friday.



Italy has seen its borrowing costs rise in recent months, even though it has introduced structural economic reforms and taken measures to restore health to its public finances, because of fears it is vulnerable to contagion from other countries in the middle of the crisis.



Monti and Rajoy had threatened not to back an agreement for a 120-billion-euro package to stoke growth in Europe unless German Chancellor Angela Merkel dropped her opposition to the proposal. Under the deal, which was clinched in the early hours of Friday following lengthy talks that started on Thursday afternoon, it will be possible for countries that respect EU budget rules to request that rescue funds be used to buy their bonds, thus easing pressure on them.



A country requesting bond support would have to sign an agreement outlining their policy commitments, but they would not be obliged to undertake extra austerity measures or economic reforms.



The summit also agreed to create a single supervisory body for eurozone banks, which is seen as the first step towards a European banking union.



Earlier this month the EU agreed to lend Spain up to 100 billion euros to support its struggling banks.