European Union leaders have approved a loosening of budget deficit rules for countries using the single EU currency, the euro.

EU leaders, meeting in Brussels, agreed to give member states more freedom to breach the budget deficit limit of three percent of gross domestic product -- under special circumstances.

France and Germany had called the old budget deficit rules too strict.

News reports say the leaders are also likely to informally consider plans to lift a 15 year-old EU arms embargo on China.

Diplomats say a new Chinese law authorizing the use of force against Taiwan if it tries to declare independence has effectively stalled plans to lift the embargo by June.

But China Tuesday urged the leaders to end the ban.