Eurozone finance ministers agreed early Tuesday to grant Spain an extra year until 2014 to reach its deficit reduction targets and a 30-billion-euro (37-billion-US-dollar) loan by the end of this month to help Madrid's troubled banks.

After nine hours of talks lasting well after midnight, the 17 countries using the single currency agreed on a memorandum of understanding on Spain to be formally approved "in the second half of July," eurozone chief Jean-Claude Juncker said.

The accord, which envisages a rescue package of up to 100 billion euros (123 billion US dollars), allocates a first tranche of 30 billion euros by the end of July to help Spain's struggling banks, with reimbursement deadlines set "up to 15 years."

The finance ministers also agreed to extend a 2013 deadline for Spain to cut its public deficit to the EU limit of 3.0 percent of its gross domestic product by one year, he said.

The extension was based on the "significantly worsening economic situation in Spain and its impact on the budgetary situation," Juncker said, adding that the country has to implement all necessary measures to bring its public finances in line with EU norms.

Under the new terms, Spain will have to trim its huge deficit to 6.3 percent of GDP this year, and to 4.5 percent in 2013 and 2.8 percent by the end of 2014.

Spain has revised its 2011 public deficit to 8.9 percent of GDP instead of 8.51 percent as reported earlier.

As part of the agreement, there will be specific conditions for specific banks, and the supervision of the financial sector overall will be strengthened, Juncker said.

"We are convinced that this conditionality will succeed in addressing the remaining weakness in the Spanish banking sector," he said.

The likely softening of the deficit target is expected to ease the country's financing pressure in the bond market as its ten-year bond yields rose back to above 7 percent this week, approaching euro-era highs.

Experts said even a deadline extension would be a huge burden for Spain, given the country's high unemployment, economic recession and failing banks.

The conservative government of Prime Minister Mariano Rajoy has pledged to cut Spain's public deficit to 5.3 percent this year.