Papers catch up with Prince's news

Thursday night's statement from the Prince of Wales's private secretary, Sir Michael Peat, dismissing as ludicrous allegations made against the Prince by a former royal servant, left the papers playing catch-up.

But even the early editions contain plenty of indications of the drama that was to come.

The Times speaks of Royal officials being locked in emergency meetings, following the High Court's lifting of the injunction against the Guardian naming another former royal servant, as the person who had obtained gagging orders.

The Sun talks of the monarchy bracing itself for a raft of potentially devastating revelations.

The Daily Mail, whose sister paper, the Mail on Sunday, first sought to publish the allegations, describes Thursday's development as "sensational", after what it calls "six days of deafening silence from the Palace".

But the Mail says that, far from limiting the damage, the statement looks like detonating a renewed bout of speculation about the allegations.

The Guardian stresses it has no reason to believe that the allegations are true.

But it comments that the saga shows the lengths to which tabloids hungry for scandal and an increasingly bruised royal household are prepared to go, in an ever more bitter battle.

'Granita 2'

A number of the papers combine their coverage of Michael Howard's coronation as Conservative leader with their reporting of the tensions between Gordon Brown and Tony Blair.

"Behind the smiles - it's war", reads the headline in the Guardian.

"The day Gordon went public" is the Independent'sversion.

The Daily Telegraphspeaks of astonishment and incredulity among Labour MPs that Mr Brown should have aired what it calls his personal feud with the Prime Minister on the day that the Tories appeared to be ending their 12 years of civil war.

The Telegraph suggests that this may mark a dramatic switch in the outlook for the two parties.

It says that for Labour, "it's war as Brown stakes his claim to Blair's crown" while, for the Conservatives, there is a "new mood of unity".

Reporting that the Chancellor and the Prime Minister were trying to patch up their differences over dinner on Thursday night in Downing Street, the Daily Mirror is not alone in dubbing the occasion "Granita 2" - a reference to the men's famous leadership pact allegedly struck at an Islington restaurant nine years ago.

'Mortgage misery'

In an editorial, the Mirror urges them to sort out their differences; it says the new Tory leader must not be underestimated.

There is much concern about the prospects for interest rates after Thursday's announcement of a rise in the base rate of a quarter of one per cent.

The Daily Express reports that millions of debt-ridden home owners face "mortgage misery" having already been "hammered" by increases in national insurance and council tax.

The Mail says the move has also rekindled fears of a crash in house prices as the era of cheap loans ends.

The Financial Times says there is no doubt that the interest rate cycle has turned.

The Independent reports new archaeological discoveries at the world's most famous "lost city."

The Inca ruins of Macchu Picchu in Peru was part of a much larger complex than had been realised, it says.

An Anglo-American expedition is said to have uncovered a previously-unknown series of sacred ceremonial buildings scattered over at least a square mile of jungle - two miles from Macchu Picchu itself.