Morning papers: Eurozone periphery’s borrowing costs tumble

Borrowing costs for the eurozone’s crisis-hit countries tumbled on Tuesday after a surge in investor demand for Irish government bonds allowed Dublin to easily raise almost half its funding target for this year, reports the Financial Times.

Yields on government debt, which move inversely with prices, fell sharply in Spain, Portugal and Greece as well as Ireland after investors placed €14bn of orders in an offer of 10-year Irish bonds.

Shop prices fall at quickest pace for seven years

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Shop prices fell at the fastest pace for at least seven years in December as retailers desperately cut prices in an attempt to attract Christmas shoppers, reports the Daily Telegraph.

Shop prices fell 0.8 per cent in December compared to a year ago, with food prices up 1.7 per cent but non-food prices dropping 2.3 per cent. Clothing prices fell by 9.9 per cent.

JP Morgan Chase to pay $2bn in penalties for Madoff ties

JP Morgan has agreed to pay a record $2bn to settle charges that it knowingly ignored evidence that convicted fraudster Bernard Madoff’s massive Ponzi scheme was “too good to be true”, reports The Guardian.

The settlements, announced Tuesday, included a so-called deferred prosecution agreement that requires the bank to acknowledge its failures but also allows it to avoid criminal charges provided reforms are enacted at the bank within two years. No individual executives were accused of wrongdoing.

Eurozone losing ‘safety margin’ against deflation trap

Eurozone inflation has fallen to the lowest recorded under two key measures, raising the risk of a ‘textbook’ deflation trap if recovery falters or there is an unexpected shock, reports the Daily Telegraph.

Core inflation – stripping out food and energy – fell to 0.7 per cent, lower than at any time following the Lehman crisis.

UK car production will surpass record 1970s level by 2017

Industry experts have predicted UK car manufacturing output will soon return to levels not seen since the 1970s, breaking four-decades-old records as companies pump billions of pounds into the sector, reports The Guardian.

The Society of Motor Manufacturers and Traders (SMMT) has predicted that car makers will surpass the 1.92m vehicles built in Britain in 1972 within three years. The UK built 1.46m vehicles in 2012, a number expected to rise to a six-year high of more than 1.5m when figures for 2013 are published on 23 January.