Tuesday newspaper round-up: Greece crisis/Euro, Xstrata, British Airways

Traders and hedge funds have bet nearly $8bn (£5.1bn) against the euro, amassing the biggest ever short position in the single currency on fears of a eurozone debt crisis, the FT reports.

Figures from CME Group showed the build-up in net short positions in the week to 2 February represents more than 40,000 contracts traded against the euro, equivalent to $7.6bn. It suggests investors are losing confidence in the single currency's ability to withstand any contagion from Greece's budget problems affecting other European countries, the FT reports.

Pressure on the Greek government to put its books in order or face a bail-out intensified as investors continued to flee its debt, pushing the country further towards a possible debt spiral. Yields on Greek debt rose by 14 basis points, as investors digested the fact that G7 and eurozone finance ministers refused at their weekend summit to provide more detail on a rescue package for the troubled economy, the Telegraph reports.

Sterling tumbled to an eight-and-a-half-month low against the dollar yesterday as investors, worried about the continuing fiscal difficulties of some eurozone countries, fled to the safety of the greenback. The pound has plummeted by nearly ten cents since mid-January amid mounting fears over how countries, including Greece and Spain, will meet their debt obligations, the Times reports

One of the world's leading economists has urged Gordon Brown to reject "fiscal fetishism", defy the markets and maintain, or even extend, the fiscal stimulus of the British economy. Joseph Stiglitz, who won the Nobel Prize for Economics in 2001 and has served as chief economic adviser to President Clinton and chief economist at the World Bank, warned that the financial markets were like a "crazy man" that could not be appeased with cuts to public spending, the Independent reports.

Hundreds of Cadbury workers at a factory that the new owner Kraft promised to keep open face losing their jobs. The Somerdale plant at Keynsham, near Bristol, will in effect shut down with the loss of 400 jobs, although it may remain open with a skeleton staff, The Times has learnt. Cadbury had planned to close it this year as it moved more of its confectionery manufacturing to Poland. Yet Kraft said, in its first approach to Cadbury shareholders in September, it "would be in a position to continue to operate" the factory.

Xstrata, the mining company, has acknowledged that a merger with Glencore, the privately held commodities trader, could create value. The prospect of a merger between the two companies, which, in Willy Strothotte, share a chairman, has been building in recent months, as Xstrata pursued deals to gain scale, while Glencore tapped capital markets, the FT reports.

The recall crisis at Toyota has spread to the Lexus, the carmaker's luxury marque, as its hybrid model is set to join the third-generation Prius on recall because of brake-system faults.Toyota is expected to announce as early as today that it is recalling more than 300,000 Prius models. The announcement will also include the Lexus hybrid, which is sold in the United States, and the Toyota Sai, a hybrid saloon marketed only in Japan, the Times reports.

Meanwhile, Toyota's recall crisis has wiped more than 10% off the value of the company's brand and could damage the reputation of Japanese car makers for a generation, one of the world's leading brand experts has warned. Brand Finance, which publishes an influential ranking of leading brands, said Toyota's poor handling of the crisis meant it was downgrading the brand from AAA rating and a value of $27bn (£15.4bn), to an A rating and $24bn, the Telegraph reports.

Britain's bailed-out banks are still not lending to cash-strapped businesses and there is little the Treasury can do to improve the situation, a group of MPs will warn this morning. Having stepped in with £850bn of support for the teetering financial system last year, the Government succeeded in maintaining stability and securing retail deposits, a report by the House of Commons Public Accounts Committee (PAC) will say, the Independent reports.

Lord Myners will renew his attack on institutional investors this morning, telling them that an excessive bonus culture in the financial services industry is hitting British pensions. The City Minister, who wrote to big shareholders last month demanding to know what they planned to do to limit bankers' bonuses, will use a speech to the National Association of Pension Funds (NAPF) to emphasise that the real losers in the failure of institutional pension funds to control bonuses are the funds' own clients, the Times reports.

Retailers experienced the worst January in 15 years last month as the bad weather and the VAT rise deterred spending. Data from the British Retail Consortium (BRC) showed that the value of sales rose by 1.2%t last month, the lowest rate of growth recorded in any January since the BRC's records began in 1995 and a sharp drop from the 6% rise in December, the Times reports.

British Airways' credit ratings have been downgraded by Standard & Poor's just days after the airline's chief executive Willie Walsh warned that the carrier was heading for record losses this year. The credit agency cut its long-term corporate rating on the airline from to BB- from BB and took similar action for the carrier's senior unsecured debt, the Telegraph reports.