(L-R) Denmark's Prime Minister Helle Thorning-Schmidt, European Council President Herman Van Rompuy and European Commission President Jose Manuel Barroso address a joint news conference during a European Union leaders summit in Brussels, Friday. — Reuters BRUSSELS — After 18 disappointing summits since the start of the debt crisis, Europe's leaders appeared Friday to have finally come up with a set of short-term measures and long-term plans that show they are serious about restoring confidence in their currency union. In the face of pressure from the embattled euro zone countries Italy and Spain, European leaders agreed to use the bailout funds to recapitalize struggling banks directly, cheering financial markets but prompting unease in Germany, whose taxpayers may face more risk. Stocks and the euro opened strongly higher in Europe and were still rising through mid-afternoon — a clear suggestion that the summit, by breaking new ground, had exceeded expectations. Analysts cautioned that earlier summit agreements had prompted market rallies that proved short-lived. The decision, by leaders of the 17-nation euro zone, would allow help to banks without adding directly to the sovereign debt of countries, which has been a problem for Spain and potentially for Italy. European Council President Herman Van Rompuy called it a “breakthrough.” The decision is a victory for Spain and Italy, whose borrowing costs have risen to near unsustainable levels despite their efforts to cut spending and reform their labor markets. In Germany, Chancellor Angela Merkel is likely to face a grilling from a skeptical parliament later. Heading into the summit, Merkel had stuck to her line that any financial help from Europe's bailout fund must come with tough conditions, so a separate decision allowing countries that have reformed their economies easier access to bailouts, without such stringent conditions, was widely seen as a defeat by the German press. — AP
