HIGHLIGHTS: EU leaders' meeting in Brussels

BRUSSELS (Reuters) - The following are comments by European Union leaders after their meeting on Sunday in Brussels.

FRENCH PRESIDENT NICOLAS SARKOZY

"First of all, this meeting allowed us to reach an agreement on the treatment of toxic assets."

"The details of the agreement are as follows. It's the choice of each state to support its banks. Big flexibility in deciding which assets are eligible but a European framework to ensure the good functioning of the internal market."

On EIB help for the car sector:

"It's insufficient. We need to go further in the weeks ahead."

On protectionism:

"I've never believed in protectionism. Never. And if the crisis of '29 was as bad as it was it's perhaps because the response was protectionism. So is it a bad word? Yes. It's a bad idea. But on the other hand I have never believed in being naive. I ask for reciprocity. Between protectionism and free-tradism, there can perhaps be a balance, meaning from my point of view there's no such thing as liberty without rules."

On bad bank idea

"I don't really see the point of nationalizing a whole system. But if you have a bank, with enormous problems and the state takes a part of the responsibility for the bank, then yes, with the aim of taking it public again, as I did with Alstom. Take the example of Banque populaire and Caisse d'Epargne. We're not merging them and taking a 20 percent of the new group for fun. You could say it's a partial nationalization."

"I prefer to do that than nationalizing losses. With the bad bank, it's not the banks you're nationalizing, it's the losses. With the bad bank, it's not the banks you're nationalizing, it's the losses."

GERMAN CHANCELLOR ANGELA MERKEL

"Everyone is agreed that it is good to have the internal market and that the Commission is monitoring our stimulus packages."

On euro entry rules

"I think the criteria should be maintained... There are requests to enter ERM 2 faster, we can have a look at that."

"Bulgaria wants to enter the ERM, when the criterion fulfilled, then they should come in.

IRISH PRIME MINISTER BRIAN COWEN

"We met today and agreed we can only face the present challenges and overcome the current crisis if we continue to act together in a coordinated manner... within the framework of the single market and the EU.

Does Ireland need help from the EU?

"There have been various comments made in Germany and what it indicates is again the broad German position which has always been pro-European. From our point of view as a member of the euro zone we have indicated we are committed to correcting our own financial situation."

"We have submitted to the European Commission a stabilization update which indicates that by 2013 we intend to take whatever decisions are required to work within the growth pact guidelines and they have been accepted.

UK PRIME MINISTER GORDON BROWN

"Europe must continue to play its part in stimulating the global economy and we agreed today that that was what Europe intended to do, with a coordinated fiscal stimulus that is now 1.5 percent of national income and European-wide action to keep interest rates low."

"Bold global action, a global grand bargain, is not now just necessary but it is vitally urgent to deal with the challenges of the world economy."

"The communique stresses that protectionism is no answer to the current crisis."

On the auto industry: "The competition rules, the state aid rules, will have to be adhered to."

"I think it is time to deal with the problems that arise both through regulatory havens and tax havens."

HUNGARIAN PRIME MINISTER FERENC GYURCSANY

Asked on council's response to idea of accelerated euro zone entry procedures:

"I listened very carefully to Sarkozy. His approach was very close to mine. In this new situation, we need a new response. In a new situation, we should not apply old rules, just old solutions."

"It is in Europe's interest to bring everyone into the eurozone. We have to do our best to have these processes."

"We consider his (Sarkozy) talks as support of our common interest to enlarge the eurozone as fast as possible."

EUROPEAN COMMISSION PRESIDENT JOSE MANUEL BARROSO

"Support for parent banks should not imply any restrictions on daughter banks. We were able to agree that."

"On impaired assets, there was overall agreement and I think a formal agreement can be taken now at the formal summit on those guidelines."

"There was general agreement on the findings of the high level group I established (de Larosiere)."

"For a Europe without barriers we need a Europe with rules."

On help to needy nations:

"more will be done, but looking at the situation on a case by case basis, where there is a need"

"The euro zone area meetings of the finance ministers will go on as usual. If member states of the euro believe it is necessary to have a summit. It was not on the agenda today and I don't expect it soon."

CZECH PRIME MINISTER MIREK TOPOLANEK

"We recognized the importance of dealing with impaired bank assets. We should now be able to move forward with a restructuring of the whole bank sector."

"We agreed on the need for long-term sustainability of public finances."

"The prospects for sustainable growth in east Europe are very good."

"Situations are different country to country. We have to look at each situation case by case and react appropriately."

"We agreed that as much as possible we should use the single market as a motor for growth."

"We do not identify any case of protectionism (in a member state)."

Special aid package for east was rejected

"It was clear already in advance it wasn't a normal call... they felt a great need for solidarity but also national responsibility.

"The EU is going to leave no one in the lurch ... but that approach (regional rescue package) was rejected."

"As to joining the euro zone, there was broad agreement it would be an error to change the rules of the game at the moment.