Andreas Rinke & Annika Breidthardt | Brussels | December 8

Reuters - The European Union failed to secure backing from all 27 countries to change the EU treaty at a summit on Friday, meaning any deal will now likely involve the 17 euro zone countries plus any others that want to join, three EU diplomats said.

An agreement at 27 fell through after British Prime Minister David Cameron demanded concessions that Germany and France were not willing to give, one of the officials said.

The decision means Britain could now be left outside the tent as up to 25 EU member states - not including Denmark which has an opt-out from the euro -- push ahead with deeper integration, including much tighter debt and deficit rules among the euro zone countries, the diplomats said.

[...]

As well as discussing treaty change during more than 10 hours of talks on the first day of a two-day summit, EU leaders also debated steps to strengthen their financial resources to tackle the debt crisis.

One diplomat said the leaders had agreed that the euro zone's permanent bailout fund, the European Stability Mechanism, would have a capacity capped at 500 billion euros, rather than earlier expectations that it could top that figure.

It was also agreed that the ESM would not be granted a banking licence, as had originally been proposed by European Council President Herman Van Rompuy, the diplomat said.

The leaders also agreed to explore the idea of providing bilateral loans to the International Monetary Fund totalling 200 billion euros, with 150 billion of that coming from the euro zone, to bolster IMF resources to tackle Europe's debt crisis.

Via ZeroHedge: And Scene: Europe Agrees To Disagree, Next Summit Date Set For March 2012 As David Cameron Kills Compromise