BRUSSELS (Reuters) - An EU budget haggled out in marathon talks on Friday cut deeply into a new transport and energy fund and sacrificed ambition to make farming greener, but broke ground by committing a fifth of spending to the climate.

Spending for cross-border transport, energy and telecoms projects was one of the main victims of the focus on austerity.

It was chopped to just under $40.14 billion, down from an initial proposal that had earmarked 50 billion.

"This is at least a door opener for interconnecting European energy infrastructure in the coming years," Energy Commissioner Guenther Oettinger said in a statement.

"We need to make the most out of it by using innovative financial instruments."

The Commission has estimated 100 billion euros is needed just to improve energy transmission lines and achieve efficiencies through a single, connected European energy market, making use of an increasing share of renewable power.

The idea of providing some EU cash for "projects of common interest" - such as a southern gas corridor to diversify supplies - is to trigger much greater private investment. EU member states would have to agree on which projects were of strategic importance.

Campaign groups condemned the conservatism of the budget, which cut more innovative spending plans from the original Commission proposals, while safeguarding agricultural subsidies.

Climate Commissioner Connie Hedegaard has also criticized the agricultural lobby for resisting moves to link subsidies to more environmental farming practices. Continued...