Sunday newspaper round-up: FX, Gas, M&S, RBS, IAG, Tesco

8th Jan 2012 15:00

"The Euro is still above the fair value of $1.25 implied by purchasing power parity - and it has been so ever since its recovery from its disastrous early years. A move well below $1.25, if not quite to $1.10, looks more likely if the US recovery story suggested by yesterday´s unexpectedly strong jobs data gains traction. This pushed the euro below $1.27, a 16-month low. Since 2008 the euro has been supported by the "risk-on" story, which holds that it tracks sentiment, rising when investors sell dollars for riskier assets. This chapter is ending. Nothing, historically, sinks the euro faster than comparisons with the dynamic potential of the US, even before uncertainties thrown up by the Eurozone´s homegrown crisis. This story is not finished," according to the Financial Times´ Weekend edition. When Marc Bolland stands up to present Marks & Spencer's Christmas trading update on Tuesday, he may be forgiven if he takes a pristine handkerchief from his impeccable Autograph suit and wipes his brow in relief. He, like many fellow shopkeepers, appears to have escaped the catastrophe that was predicted by some high street watchers. Father Christmas arrived in the nick of time and filled - if sparingly - retailers' stockings. Hopes are rising that this week's figures from the likes of Debenhams, M&S, Halfords, Tesco and Dixons, might not be that bad. Indeed, they may be half decent. Analysts believe M&S will post good food figures and that its non-food sales might have fallen by no more than 2.5% compared with last year. Some are predicting its clothing sales might even be steady with last year, The Telegraphs says.Royal Bank of Scotland is set to close its cash equities division, with the potential loss of 1,200 jobs, as it struggles to prepare for a long-term exit from public ownership. The government-controlled bank is set to announce next week which parts of its investment bank division, Global Banking & Markets, will be saved, and which will be sold or closed. The cash equities unit, which has not made a decent return for years and frequently makes losses, is to be named as unwanted, according to sources familiar with the matter. While RBS is likely to stop short of saying that it will definitely be closed, senior sources in the bank regard the chances of a sale as close to zero, writes The Sunday Times. Tesco is this week set to announce its worst Christmas performance for decades. The supermarket giant, which accounts for £1 in every £7 spent in the shops, is expected to say sales over the past six weeks worsened despite the launch of a major price-cutting initiative less than four months ago. Broker JP Morgan Cazenove has forecast a 1.5% drop in sales from the chain's British stores that have been open for at least a year. That marks a sharp deterioration compared with the Christmas period a year ago. Sources told The Financial Mail on Sunday that group chief executive Philip Clarke has stopped short of cutting prices to a level that would hurt profitability. However, the sales decline and the erosion of market share in Britain may force Mr Clarke to reconsider his strategy.A battle for Anglo-Scottish business air passengers is looming as CityJet prepares to announce new flights and consolidate operations in Edinburgh. The Air France-KLM-owned airline is expected to unveil extra services between the Scottish capital and London City airport, which has become a favourite among business travellers. A new route from Aberdeen to the Docklands airport is also in the offing, along with more flights from Dundee. CityJet chief executive Christine Ourmieres told Scotland on Sunday that the new base at Edinburgh Airport, with 42 staff, signalled the start of a new battle to win passengers from rival British Airways. The base will also serve Air France's feeder route between Edinburgh and its Paris hub.Ofgem has threatened to crack down on the energy giants EDF, Eon, npower and ScottishPower if an investigation finds their online tariffs are examples of illegal 'predatory pricing'. The warning comes as British Gas is considering cutting gas prices by up tO 10% over the next few months. The move follows sharp falls in wholesale gas costs over the past two months. Any cut by British Gas would be expected to start a price war. Talks are taking place between the Ofgem and Energy Department officials after complaints from small energy companies over big price discounts by their larger rivals, The Financial Mail on Sunday reports."Prime Minister David Cameron has said for the first time he would veto a European-wide financial transaction tax unless it was imposed globally, deepening a confrontation with European Union heavyweights France and Germany. He said France should be free to go it alone and introduce a financial transactions tax if it wished. Paris and Berlin have been pushing for an EU-wide tax of financial transactions but Britain has strongly resisted, fearing it will damage the City of London, a global financial centre where much of the tax would be raised. (...) "The idea of a new European tax when you're not going to have that tax put in place in other places, I don't think is sensible and so I will block it," Mr Cameron said in a BBC interview," The Telegraph reports.Politicians like to promise better times ahead. But these days many are peddling gloom. In her new year's address, Angela Merkel, Germany's chancellor, predicted that 2012 would be more difficult for the eurozone than 2011. Nicolas Sarkozy, France's president, spoke of "the year of all risks". Half a world away, Manmohan Singh, India's prime minister, warned Indians not to take fast growth for granted. In one way this pessimism looks a little overdone. The worst outcomes ?a collapse of Europe's single currency or a hard landing in China?are avoidable. The latest crop of statistics, particularly better-than-expected figures on global manufacturing prospects, argue against a sudden slump. America may do a bit better than forecast. The overall effect should be sluggish, not dire: global output may grow by 3%, the slowest since 2009 and well below the average of the past decade, The Economist holds.Italians' reactions to four stringent austerity packages have so far been fairly muted. Rome saw a violent protest last October, but it seemed to be directed at a range of targets, from the then government of Silvio Berlusconi to capitalism in general. In recent weeks, however, there have been at least eight acts of terrorist violence or intimidation aimed at the authorities' efforts to tighten Italy's public finances. The target is the tax-collection service, Equitalia. On December 9th the agency's director-general, Marco Cuccagna, suffered hand and face injuries when a parcel bomb exploded at his office in Rome. The following week another parcel bomb was intercepted at Equitalia's headquarters, The Economist writes.In its boldest move into non-food yet, Yorkshire-based grocer Morrisons is in advanced talks with electricals retailer Carphone Warehouse, which co-owns the Best Buy Europe chain, about taking on the sites. It is thought that all 11 Best Buy stores are under offer to Morrisons, although it could end up choosing only the best sites. The 11 sites, all of which are enormous "sheds" on out-of-town retail parks, are up for sale following Carphone Warehouse's decision late last year to pull its disastrous joint-venture with the American electrical goods giant, Best Buy. Morrisons, which bought Kiddicare last year for £70m, has ambitions to turn the brand into Britain's pre-eminent baby equipment retailer, The Telegraph reports.AB