No precise amount was set because Spain said it needed time for an independent assessment of the capital needs of its banking sector, which is due to be delivered in less than two weeks.
The move follows the bailouts given to Greece, Ireland and Portugal since 2010 and will raise the total sum that the European Union and the International Monetary Fund have devoted to European rescues in the debt crisis to €500 billion.
Markets had been falling in recent weeks on fears that the capital shortage in the Spanish banking sector could widen into a full-blown public debt crisis for Spain, which would have forced the euro zone's fourth-largest economy into an even bigger bind that would have stretched the E.U.'s firefighting funds to the limit.
Relief May Be Temporary
However, the news may only bring temporary relief, because investors are bracing themselves for the Greek election on June 17 that could plunge Europe deeper into turmoil if voters opt for the left-wing Syriza party, which wants to cancel austerity measures imposed in return for international aid.
Policy makers said the Spanish bailout would contain the crisis. E.U. Economic and Monetary Affairs Commissioner Olli Rehn told Reuters on Sunday: "I am confident this will send a strong signal to the markets that the euro area is ready to support Spain in its efforts to restructure and recapitalize its banking sector. We are ready to support Spain ... which is critical for calming down market turbulence in Europe and (ensure) the proper functioning of the financial system in Spain."
Rehn said the level of public debt in Spain was under control and that Madrid was taking "very determined action" to sustain its public finances.
The Spanish government at the weekend avoided calling the aid agreement a "rescue" because financial bailouts in the past implied humiliating conditions and surveillance by European officials.
However, German Finance Minister Wolfgang Schäuble said on Sunday that European officials would scrutinize Spain's efforts to restructure its banking sector, which got into trouble over bad real estate loans. He added that Spanish banks were not a threat to the stability of the euro.
"We have to make clear that there's no danger of contagion (from) the banks," Schäuble said in an interview with public broadcaster ARD. "It must be clear to everyone that the Spanish banks, despite all their problems, are not a danger for the stability of the euro and they will be getting enough capital."
However, Nobel Prize-winning economist Joseph Stiglitz criticized the bank bailout. "The system ... is the Spanish government bails out Spanish banks, and Spanish banks bail out the Spanish government," Stiglitz said on Friday. "It's voodoo economics. It is not going to work and it's not working."
Intellpuke: This article is a compilation of reporting by Spiegel journalists and various news agencies; you can read it in context here: www.spiegel.de/international/europe/market-reaction-to-european-union-bailout-of-spanish-banks-a-838087.html