BERLIN — Angela Merkel, the German chancellor, on Wednesday praised the progress that Italy’s prime minister, Mario Monti, has made in revamping his country’s economy. But she also indicated there were limits to how much financial risk Germany was willing to bear in helping out its euro zone allies.

After a two-hour meeting with Mr. Monti in Berlin, Ms. Merkel said she was impressed by what she called the Italian government’s “wide reaching” efforts to streamline the economy and cut government spending.

“I am personally convinced that these reform efforts will bear fruit, that they will improve Europe’s overall competitiveness,” she said.  Read more