THE Taoiseach, Mr Bruton, yesterday dismissed suggestions that the Northern Ireland peace process had met with a serious setback following reports that the British government had reacted negatively to the latest Sinn Fein proposals aimed at bringing about a new ceasefire.

Speaking in Rome, where he was briefing Italian Prime Minister, Mr Romano Prodi, on next month's European Council summit in Dublin, Mr Bruton stressed that the peace process was still ongoing.

"The situation is that contacts are continuing... there is nothing definitive. Intensive efforts are being made by all concerned to find a basis for a complete cessation of violence that will hold in all circumstances.

"That requires compliance with the rules of the (multiparty) talks, in particular paragraphs eight and nine which require a ceasefire by the IRA for Sinn Fein to take part and which also require that Sinn Fein be able to show that this ceasefire is unequivocal and will hold and is not something that can be gone back on...

"The discussion that is currently going on among all the parties is designed, first of all, to get a ceasefire but also, in so doing, have an understanding about the way in which the terms for Sinn Fein's participation at the talks can be met, and that is a difficult, task."

Asked if he felt that the ball was now back in Sinn Fein's court, the Taoiseach responded: "It's not as simple as that at all. In any event, decisions and actions by more than one party will be required."

During his talks with Mr Prodi yesterday evening, Mr Bruton outlined the agenda for next month's EU summit in Dublin, highlighting discussion of the single currency, unemployment, war on drugs and the presentation of the draft Intergovernmental Conference (IGC) text.

For his part, Mr Prodi reiterated Italy's ongoing commitment to the whole process of European economic, social and political integration.

Earlier this week, as president of the European Council, Mr Bruton formally congratulated Italy on the return of the lira to the EU's Exchange Rate Mechanism (ERM). The lira, which dropped out of the ERM in September 1992 was last weekend after two days of, tense negotiations in Brussels between EU finance ministers and central bankers. The lira was readmitted at an exchange rate of 990 lira to the deutschmark.

Italy was the sixth EU partner country visited by the Taoiseach in the last three days, following meetings with the government heads of Spain, Portugal, Sweden, Denmark and Luxembourg.