The FTSE 100 Index sank 157.2 points to 4246.7 by the close of trading as miners and banks dragged the top tier lower.

A downbeat opening on Wall Street also added to the sell-off as US markets responded to poor corporate results including lower-than-expected results from coffee giant Starbucks.

In London, Vodafone was one of only a handful of blue chips in positive territory after new chief executive Vittorio Colao promised a progressive dividend policy and stronger cash generation.

This offset disappointment at a downgrade to the firm's revenues guidance as shares rose 6.7p to 115p.

Miners accounted for much of the FTSE's fall after giving back gains seen yesterday in the wake of China's economic stimulus package.

Vedanta Resources was the leading blue-chip casualty, losing 14 per cent or 115p to 683p, followed by Eurasian Natural Resources, 31.25p lighter at 283p.

Crude oil meanwhile slipped as low as $58 a barrel as economic pessimism returned, hitting the likes of Tullow Oil and BG Group, which shed 54p to 498p and 94p to 904p respectively.

Banks were also under pressure, with Lloyds TSB down 17.8p at 177.4p. HBOS was 8.5p lower at 99.2p after Prime Minister Gordon Brown said there were no serious bidders for the firm other than white knight merger partner Lloyds.

Winners: Vodafone up 6.7p at 115p, Tesco ahead 8.6p at 331.6p, Capita up 3p at 644p and Shire ahead 2.5p at 835p.

Losers: Vedanta Resources off 115p at 683p, Man Group off 32.75p at 248p, WPP down 40p at 341p and ENR, which finished 31.25p off at 283p.

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