Citing senior sources at the European Commission and in the Spanish government, the daily said France would be given an extra year until 2014 rather than 2013 to rein in its fiscal gap, while Spain would be given until 2015 or 2016 rather than 2014.

The European Central Bank is keen to grant Spain one extra year while the International Monetary Fund (IMF) is pushing for two years more, the newspaper said.

Spain sought support from its European partners this year for its ailing banks, hit by a burst property bubble. Recession is also undermining government efforts to keep the public debt burden in check, and financial markets expect Madrid to seek sovereign aid sometime next year.

Spain's Prime Minister Mariano Rajoy might delay an aid request if the European Commission announced new fiscal targets for the country in a review due on February 15, the paper said.

According to El Pais, the Commission has agreed for Spain on a new deficit path of 7 percent of economic output in 2012 and 6 percent in 2013. That compares to current targets of 6.3 percent for 2012 and 4.5 percent for 2013.

The paper also said the Commission would require Spain in return to agree to new structural reforms, including a new pension reform.

(Reporting By Jesús Aguado; Editing by John Stonestreet)

• A Permanent Economic Emergency