European leaders threw a critical financial lifeline to struggling Spain and Italy and agreed to a roadmap to restructure the euro currency union at a Brussels summit that continues through Friday.

After marathon overnight talks, the 27 European Union leaders agreed Friday on a series of short and longer term measures to shore up the struggling eurozone. As expected, they signed onto a growth and jobs package worth about $151 billion for the 17-nation area.

At a news conference in Brussels, EU president Herman Van Rompuy said the leaders also agreed that eurozone's permanent rescue fund could be used to help struggling banks, without adding to the sovereign debt of member states.

"Via this procedure, we can recapitalize the banks directly as soon as we have a single European supervisory mechanism, and we can switch from the EFSF to the ESM [permanent rescue fund], so we can break the circle between banks and sovereigns," he said.

Breaking that spiral is critical for Spain and Italy, which have watched their borrowing costs soar in recent weeks.