The FTSE 100 index has closed down 85.9 points at 5448.6 as banks and other stocks suffered amid fading hopes for a quick cut in interest rates.

Retailers, pub groups and housebuilders were nursing heavy losses after the Bank of England indicated rate cuts were off the agenda while it tries to steer inflation back down towards its 2 per cent target.

Heavyweight mining stocks helped limit the damage in London as they tracked higher commodity prices. Anglo American was 112p higher at 2791p while Vedanta Resources added 51p to 1750p and Kazakhmys rose 39p to 1205p.

B&Q owner Kingfisher and Marks & Spencer were among the high profile fallers in the top flight - down 10 per cent or 13.8p at 124.6p and 29.75p at 266.25p respectively.

Fashion retailer Next joined the slide, falling 89.5p to 990.5p, with building supplies company Wolseley also shedding 37.75p to 417.5p.

Enterprise Inns led the fallers board, losing 11 per cent of its value during a disastrous session for the pubs sector.

Shares in Enterprise fell 43.25p to 342.75p, while in the second tier Punch Taverns lost 45p to 323p and JD Wetherspoon dipped 42.25p to 246.75p.

Heavyweight banking stocks were also under pressure after yesterday's credit crunch losses from banking giants UBS and JP Morgan reignited concerns about further pain for their UK counterparts.

Barclays was one of the sector's biggest fallers, down 7 per cent, or 27p at 351.5p, with Halifax Bank of Scotland off 24p at 305p and Royal Bank of Scotland 15.75p lower at 229.75p.

Winners: Anglo American up 112p to 2791p, Kazakhmys up 39p to 1205p, Vedanta Resources up 51p to 1750p and BHP Billiton, which closed up 44p to 1512p.

Losers: Enterprise Inns down 43.25p to 342.75p, Marks & Spencer down 29.75p to 266.25p and Kingfisher, which ended the day 13.8p down at 124.6p.

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