BERLIN (Reuters) - German Chancellor Angela Merkel has rebuffed suggestions from Italy that EU deficit and banking aid rules be adjusted to take account of its fiscal and financial troubles following the Brexit referendum in Britain.

"I think the Stability and Growth Pact has enough flexibility to work with, including in the current situation," Merkel told reporters at the end of a two-day summit of European Union leaders in Brussels, referring to the bloc's rulebook on deficit and debt levels.

"On the banking union we established specific rules as far as the winding down of banks, the recapitalisation of banks is concerned. And we can't come up with new rules every two years."

Rome wants to prop up Italian banks in response to financial turmoil unleashed by the British referendum. EU rules allow member states to provide financial help to banks only in exceptional cases. Italian officials have also said they plan to seek more flexibility on EU fiscal rules.

(Reporting by Noah Barkin)