European Union leaders met on Thursday to discuss the right balance between budget austerity and reviving lost growth, at the first summit for two years in which the euro zone debt crisis did not eclipse all else.

After their finance ministers gave provisional approval to a second bailout for Greece, the 27 leaders used the breathing space to focus on structural economic reforms and other ways to combat record unemployment.

Following are highlights of leaders' comments after the meeting:

EUROPEAN COUNCIL PRESIDENT HERMAN VAN ROMPUY

ON GREEK PROGRAMME:

The Greek authorities have taken decisive legislative action over the last 10 days to meet the bailout criteria.

ON FIREWALLS:

Euro zone leaders also confirmed their commitment to reassess the adequacy of the overall ceiling of the EFSF (temporary fund), the ESM (permanent fund) by the end of the month. In addition, they agreed to accelerate the payments of the paid-in capital for the ESM.

Following are comments from before Thursday night's talks:

GERMAN CHANCELLOR ANGELA MERKEL

ON FISCAL COMPACT:

We will first sign the fiscal treaty. That is an important step. We have shown a capacity to act towards a stability union of the EU. It is a qualitatively new step because it make possible a political union. So I am happy that the majority of EU members will be part of the fiscal treaty. I think that is a very, very important sign for the EU member states who show how they will guarantee stability in the future.

ON INCREASING ECONOMIC GROWTH:

Second we will occupy ourselves we can develop growth better in the member of the European Union. Here it is about improving the competitive position. In too many cases, Europe is not able to keep up with the best internationally and we must change that and so the Commission has undertaken important preparation.

Of course it is primarily about growth possibilities for Greece, but for many other countries that are performing below their potential. So it will be an important European summit in which we set out further the path forward.

The European Central Bank has made clear with the money it gave to banks that it wishes to stabilize the banking system, but that means for us politicians we have the time to improve competitiveness, growth and employment in Europe. We have to use this time. If not, we will find that the world will not trust us. However, we are committed to being better in political control, our capacity to act, coordination and competitiveness.

FINNISH PRIME MINISTER JYRKI KATAINEN

ON FLEXIBILITY FOR COUNTRIES IN MEETING THEIR BUDGET

TARGETS:

We have common rules for everybody. It would be completely wrong.

ON ECONOMIC GROWTH:

This meeting is not a crisis meeting, it's more like a regular meeting, in which we try to find a way for growth in the European area.

It's not crisis management, but it's almost as important.

SWEDISH PRIME MINISTER FREDRIK REINFELDT

ON POSSIBILITY OF GIVING SPAIN SOME FLEXIBILITY IN MEETING

BUDGET DEFICIT TARGETS:

I think it's very important now that we, after a long discussion to get new rules and regulations, that we actually follow those. I think the criticism has been that Europe discusses on a long term what kind of conditions you should have, like the Growth and Stability Pact, but at the end of the day we end up not using them.

This time we need to follow it and that goes for everyone, I would say. And of course he's trying to say that the status of the Spanish economy might be even worse than we thought. That just shows the need for even more reforms.

ON SITUATION IN GREECE:

I think there are a lot of burdens still on the Greek people. There are a lot of things that still need to be done by Greek politicians. They are actually in an election, coming up, but what we have seen is other more important countries increasing their reform orientation.

Italy, Spain, Portugal and also Ireland. Therefore, I think that gives, in a total, a more hopeful feeling around the European economy.

ON ECONOMIC GROWTH AND REFORMS IN EUROPE:

The main focus of this meeting is growth orientation that can be done without asking for more taxpayers' money - opening up markets, getting more free trade agreements with important parts of the world.

It is a crisis that was deeper and darker in December, with a few signals that are more positive - better growth in the world economy, we see reforms in key countries like Italy, Spain and Portugal, also Ireland and this gives some hope that we are going in the right direction.

BRITISH PRIME MINISTER DAVID CAMERON

Europe does not just face a debt crisis, Europe also faces a growth crisis.

And Britain, together with 11 other European countries, has come together and set out a whole series of measures that the European Union could take that would help drive growth, including deregulating businesses to set them free to create more jobs.

That's the agenda I am going to be driving at this European Council and the aim is to get as many of those measures approved as possible.

AUSTRIAN CHANCELLOR WERNER FAYMANN

The sooner we have clear rules that show the finance markets that we are ready, equipped, our firewall is strong enough, the better. Anyone who speculates should know what we have prepared ourselves for.

BELGIAN PRIME MINISTER ELIO DI RUPO

ON FISCAL COMPACT:

Tomorrow we will sign the fiscal treaty.

I want the 27 (EU member states) to sign it for more growth and solidarity. I think it is time to react and to engage, it is the only way out. Europe is in difficulty and I would like to add that some think it is enough to liberalize to get out of this. I don't think so, but rather we must look for development and training, there are many things Europe can do.

Within the 25 (countries that signed up to the pact) there are very clear objectives. We need monitoring (of budgets) and the very concrete measures of the European Commission can help us.

CZECH PRIME MINISTER PETR NECAS

ON FISCAL COMPACT:

I won't sign the fiscal compact (on Friday).

We are disappointed that the fundamental issue is the deficit criterion and not the debt criterion and we don't see it as a good idea to have a special euro zone summit without all contracting parties.

We are afraid of a situation where there would be a political space for possible political tension and it is not a good idea.

ON GROWTH:

Fiscal discipline is necessary but we must try to complete the single market and improve our competitiveness. It is the only way to improve the economic situation.

(Reporting by Foo Yun Chee, Barbara Lewis, John O'Donnell, Philip Blenkinsop, Robin Emmott, and David Brunnstrom in Brussels, Tim Castle in London)

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