* Europe reforms helpful but bigger firewall needed
* Repeats won't go to Congress for more money for IMF
* Cautious optimism on progress for Italy, Spain
By Glenn Somerville
MEXICO CITY, Feb 26 (Reuters) - U.S. Treasury Secretary Timothy Geithner said on Sunday that Europe's actions so far to deal with its debt crisis have averted potential financial catastrophe but said it still must put up a sturdier firewall against contagion.
"A durable solution requires both a sustained period of economic reform and a substantial financial firewall to support those reforms," he told a press conference at the conclusion of a Group of 20 finance ministers' and central bankers' meeting.
The weekend meeting focused on Europe and many G20 participants made clear they want to see Europe put up more money for its own defense against a worse crisis before they chip in with more help through institutions like the International Monetary Fund.
"There is broad agreement that the IMF cannot substitute for the absence of a stronger European firewall and the IMF cannot move forward without more clarity on Europe's own plans," Geithner said.
The U.S. Treasury chief repeated that he was not prepared to go to Congress now to seek more resources for the IMF because he didn't feel they were needed at this time.
He declined to say how big a financial firewall he felt Europe needed to put up now but noted that, in order to be credible in markets, it had to be bigger relative to possible claims that might be made on it.
The euro zone countries pledged on the weekend that they would reassess the strength of the bailout fund they now have during March. That could clear the way for other G20 countries to contribute more funds to the IMF.
Geithner sounded an optimistic note that some of the European countries seen as most at risk from a potential debt crisis spreading seemed to be getting onto sounder footing.
"I'm very encouraged by the impact so far of the combined actions of new governments in Italy and Spain doing a very good job of laying out reforms to meet their very formidable economic
challenges," Geithner said.
He also praised "a very creative and effective" European Central Bank, which has acted to ensure ample liquidity in Europe. But he conceded in response to questions that progress can take away some urgency from needed reforms.
"You always have to be worried about that but I think Europeans recognize that part of the progress that we've seen -- new confidence in markets -- is based on the expectation that Europeans have created themselves, that they have more to come."