Taoiseach and Monti agree EU needs pro-growth policies to escape debts
The Irish economy is proof that while measures to reduce the budget deficit and carry out structural reforms "can be difficult to bear in the short term," they also help achieve economic recovery, Mr Monti said.
The two leaders agreed Europe needs to boost its financial firewalls to avoid contagion from the debt crisis, Mr Kenny said.
The Taoiseach met Mr Monti in Rome, just a day after a similar meeting in Berlin with German Chancellor Angela Merkel.
European leaders are due to meet in Brussels next week to discuss a growth strategy for Europe. Mr Kenny is also expected to continue with on-going negotiations on changes to the so-called 'promissory notes' which would reduce Ireland's overall debt burden.
Meanwhile, Italy's bonds have returned 9pc this year, the second best in Europe behind Ireland's bonds which have returned 10pc. Italy sold €4.5bn of zero-coupon and inflation-linked bonds, meeting its target for the auction as borrowing costs fell.
The Treasury sold €3bn of the zero-coupon 2014 debt to yield 3.013pc, down from 3.763pc at the last auction on January 26.
Investors bid for 1.93 times the amount offered, up from 1.71 times in January. The Rome-based Treasury also sold a total of €1.5bn of inflation-linked bonds due in 2016 and 2019 to yield 2.71pc and 3.19pc respectively.
Italy's borrowing costs have fallen amid steps by Prime Minister Mario Monti to spur economic growth needed to reduce the euro-region's second-biggest debt and European Central Bank lending that's shoring up demand for government bonds.
Mr Monti's government passed €20bn of budget cuts and tax hikes in December to balance the budget in 2013. It followed last month with measures to spur competition and reduce bureaucracy.
Italian bonds gained yesterday, with the 10-year yield rising eight basis points to 5.46pc in Rome. The extra yield investors demand to hold the securities instead of benchmark German debt fell eight basis points to 3.58 percentage points.
Meanwhile, the German government has softened its resistance to increasing the eurozone's "firewall" against financial-market contagion from the Greek crisis by signalling it would consider the combination of the region's temporary rescue fund with its permanent successor.
Wolfgang Schaeuble, finance minister, said using "the remaining funds" in the European Financial Stability Facility to bolster the European Stability Mechanism was "one possible solution to the question" of how to better guard against bond market sell-offs hitting Italy or Spain.
With this, Mr Schaeuble broke with the German government's official stance that there was "currently no need" to increase the size of the €500bn ESM -- due to start life by mid-year -- and that eurozone heads of government would discuss the issue only some time in March.
Earlier he said "there are no guarantees" that the second financial bailout for Greece will work. "It may also not be the last time that the German Bundestag will have to consider financial aid to Greece," Mr Schaeuble said in a letter to German lawmakers dated yesterday.
"However, the chances of success with alternatives appear to me to be significantly lower at the current time." The second bailout has the best chance of leading to success, he said.