Following are highlights of a news conference by French President Nicolas Sarkozy and German Chancellor Angela Merkel following bilateral talks in Paris to hone joint proposals for more central control of euro zone budgets.

PRESIDENT NICOLAS SARKOZY

The Franco-German agreement is very complete. It will be written up in a letter and presented to (European Council President) Herman Van Rompuy on Wednesday.

We want to make sure that the imbalances which led to the situation in the euro zone today cannot happen again.

Things cannot continue as they have done up until today. Our preference is for a treaty among the 27 (EU members), so that nobody feels excluded, but we are open to a treaty among the 17 (euro members), open to any state that wants to join us.

This treaty would contain the following things:

Firstly we want automatic sanctions in the event of a breach of the rule on deficits below 3 percent (of GDP) and we want it to be the case where this can only be opposed by a qualified majority (of member states), that's to say the reverse of the situation we have at present.

Secondly, as we said on August 16, we want a golden rule, that is reinforced and harmonised on the European level so that the budgets of all 17 (euro zone) countries have a constitutional rule to ensure that national budgets move toward a return to balance.

Thirdly we agreed, regarding private-sector participation, to say that what happened with Greece will not be repeated. We will from now on follow the jurisprudence established by the IMF.

Fourthly we want the European Stability Mechanism brought forward from 2013 to 2012 and, within it, that decisions not be taken on the basis of unanimity but by qualified majority, a quota we estimate is of around 85 percent.

Fifthly, we want a monthly meeting of heads of state and government ... as long as the crisis continues and each meeting must have a precise agenda focused on the goal of boosting economic growth in the euro zone.

There are presidential and legislative elections. The aim that Madame Merkel and I have is that the accord in its entirety should be negotiated and concluded between the 17 euro zone members in March, because we need to go fast. The ratifications will take place after these two key French election dates.

On Thursday and Friday we aim to get all of our proposals approved and then we'll see around the table whether we will get a treaty of 27 or 17.... We are aware of the seriousness of the situation and the responsibilities on our shoulders.

As the (French) Socialist (presidential candidate) has spent some time with the German Socialists I won't need to convince him (to vote for a golden rule) since the German Socialists have voted for the golden rule in Germany.

We can't compare what is happening in a large economy like Italy or Spain with what is happening in Greece. What the chancellor and I want is to tell the world that in Europe the rule is that we pay back our debts, reduce our deficits, restore growth.

In this extremely worrying period and serious crisis, France believes that the alliance and understanding with Germany are of strategic importance... Disagreeing would mean risking the euro zone exploding.

We have agreed to confirm the agreement we made in our statement (in November) with Mario Monti -- faith in the ECB and avoiding any positive or negative comments on its action.

GERMAN CHANCELLOR ANGELA MERKEL

We are absolutely determined to take decisions at the upcoming summit.

It is very important that we work as closely together as possible... We are in a difficult situation and we need to regain trust, as the belief that we can be taken at our word has suffered.

That is why at the summit we need to regain some of this confidence and trust in our word. We want structural changes which go beyond agreements. We need binding debt brakes, which can be verified by the European court of Justice ... in order for the Stability and Growth Pact to hold.

We are open to either changing the treaty for all 27, that would be the logical way, but if there are difficulties, if someone can't do this, then we will say the euro is so important to us that we will pursue treaty change for the 17 members.

This package shows that we are absolutely determined to keep the euro as a stable currency and as an important contributor to European stability.

Under the current Lisbon treaty, it is set out that a deficit procedure can only begin when a qualified majority supports it. We want to change this, and for this we need a change to the treaty.

The European Court of Justice cannot declare a budget immediately void, as some are worried about... It will investigate whether the debt brake is put into practice in the national law in a way that ... the stability and growth pact is upheld.

Regarding the ESM, we don't want individual states to be able to hold up the whole process, so we suggest a majority of 85 percent in favour to be sufficient.

Greece was a one-off case, and the voluntary debt write-down is a one-off. From now on we want questions of state insolvency to be handled according to IMF rules.

Regarding what we have said about the ECB, nothing has changed. We reject the idea of euro bonds.

(Reporting by Vicky Buffery, Nick Vinocur, Catherine Bremer and John Irish in Paris and Alexandra Hudson in Berlin)