Italian Prime Minister Matteo Renzi (R) talks to German Chancellor Angela Merkel (C-L) as she arrives to the Italo-German intergovernmental summit at the Ferrari headquarters in Maranello, Italy, 31 August 2016.

German Chancellor Angela Merkel on Wednesday promised to help Italy rebuild its earthquake-damaged towns, and joined ranks with Prime Minister Matteo Renzi in calling for stricter European Union policies on migration.

Renzi and Merkel met in the flamboyant setting of the Ferrari headquarters in Maranello, seven days after a 6-magnitude quake which devastated a remote mountain area about 150 kilometres north-east of Rome and killed nearly 300 people.

"This summit falls at a particularly sad time in the history of our country," Renzi said in a press conference that preceded a wrap-up dinner with Italian and German business representatives, including Ferrari and Fiat-Chrysler boss Sergio Marchionne.

Merkel said Germany would finance the rebuilding of a school yet to be selected, and offered support for Rome's demands for a derogation from EU budget discipline rules to spend billions of euros on a national quake prevention programme.

"Italy will present a plan in a transparent manner and then I think that we will find a solution in Europe," she said, stressing that the European Commission would have the final call. "We will find a reasonable, sensible solution," she insisted.

The chancellor was earlier introduced to about a dozen Italian earthquake rescuers and police dog Leo, a black labrador that made national headlines after contributing to the rescue of 4-year-old Giorgia, who was trapped under rubble for 16 hours.

Merkel also said Italian and German football teams were planning a charity match, while Renzi reported that summit host Ferrari would auction one of its cars worth at least 1 million euros (1.1 million dollars) to raise money for quake victims.

Renzi and Merkel presented a united front on migration, urging the EU to repatriate migrants who do not qualify for asylum, sign readmission deals with African nations, and boost development aid so migrants have less of a reason to flee poverty.

"We will continue saving human lives," the Italian leader said after a near-record 12,000 were plucked from the Mediterranean in the past three days. "But we know that there are limits ... it is unthinkable to welcome everybody."

Merkel, who is under fire for her open-door migration policy and faces the embarassing prospect of a breakthrough by the anti-Islam Alternative for Germany (AfD) party in Sunday elections in her home state of Mecklenburg-Vorpommern, sent similar messages.

"Germany has a problem with the many people who came to us last year, and not all can stay," she said about the more than 1 million arrivals. However, she stood by her famous phrase "we can do it," saying: "I am deeply convinced that it was right to say [it] at the time."

It was the second meeting in ten days for Renzi and Merkel, after last week's Italo-Franco-German summit. They were accompanied by their respective ministers of foreign affairs, interior, defence, finance, economy and transport.

Both leaders are facing domestic challenges, but Renzi is confronting stronger headwinds, with a flagging economy and an uphill battle to win a referendum on constitutional reforms due in November. He has committed himself to resigning if the 'no' camp wins.

Merkel had kinds words for her peer. "I wish Matteo Renzi a lot of success in the implementation of his reform agenda, which, in my mind, I am an outside spectator, is good for Italy and Europe," she said.

Rome is Berlin's sixth-largest trading partner and main interlocutor in southern Europe, since Spain is mired in a political deadlock after two consecutive elections. That could change if Renzi's resignation triggers political chaos in Italy as well.

The EU's future following Britain's decision to leave in a national referendum, as well as EU anti-terrorism cooperation and actions to boost growth and fight youth unemployment were also on the agenda in Maranello.

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