There was a two-way pull on the market today, with miners heading higher but financial shares still under the cosh.
The financials won out, with the FTSE 100 ending down 106.1 points at 6270.7. An overnight fall in Japan and a 150-point opening fall on Wall Street did not help.
But it was the continuing concern about the money markets which dominated sentiment.
Ahead of its interest rate setting meeting tomorrow, the Bank of England broke its silence for the first time since the global markets crisis began, raising its reserves target by 6% and saying it could add another 25% if overnight interest rates remained high.
Analysts said there was some relief the Bank was prepared to take action, but the move did little to dispel the underlying worries, especially when the Bank said its measures were not designed to bring down the three month Libor rate - the indicator investors have been watching closely. The three month rate was fixed at 6.8% this morning, a new eight-and-a-half year high.
Meanwhile a survey of the UK services sector showed stronger growth than expected last month, giving the Bank another quandary when it comes to deciding what to do about interest rates.
"The UK services PMI rose from 57.0 to 57.6 in August, defying market expectations of a pull back to 56.5," said Richard McGuire of RBC Capital Markets.
"The robustness of these data in tandem with the improvement in the manufacturing PMI to a new 3-yr high earlier this week cautions against complacency as regards the future course of UK interest rates. The continued buoyancy of the UK's activity data in addition to the relative resilience of the housing market points to some discernible risk Bank of England rates may yet head higher this cycle. However, with the ongoing market correction likely to feed through in the form of a softening of the financial and business sectors - key drivers of growth in recent years - we continue to see the next move in UK rates as being down but not until the second half of 2008."
Northern Rock was a big loser once more, down 39p to 693p on worries the bank might have to issue a profit warning given its dependence on the wholesale money markets which are currently in some turmoil. Traders said they were not expecting any emergency statement from the bank in the short term.
But Lehman Brothers cut its recommendation for Northern Rock from equal weight to underweight and reduced its price target from 858p to 820p. Alliance & Leicester also lost ground, down 47p to £10.11 as Lehman set a 996p target.
Bradford & Bingley - another victim of Lehman - fell 21.5p to 361.25p.
To move to the positive, Vedanta Resources rose 55p to £18.47 after Merrill Lynch added the miner to its Europe 1 list. Merrill was also positive on Kazakhmys although this had little effect, with the shares falling 19p to £13.14 in the general market rout.
There was also a bit of takeover speculation to spice things up. BHP Billiton, down 31p to £14.17, was said to be teaming up with a Brazilian miner to launch a break-up bid for rival Rio Tinto, down 3p to £35.25.
Anglo American reversed earlier gains to slide 30p to £28.41 despite saying it would sell 19m shares in South African miner Exxaro, nearly halving its stake.
Elsewhere insurer Resolution was steady at 633.5p on hopes that Pearl Assurance may step in to break up its proposed merger with Friends Provident, while property group Land Securities was unchanged at £18.27 as it said it was reviewing its business structure. Analysts said this could lead to a spin-off of its outsourcing business Trillium.
Energy group BG fell 14p to 786.5p even though analysts at Sanford C. Bernstein rated the company as outperform and raised their price target from 795p to 923p.
PartyGaming put on 0.75p to 28.25p as it signed a deal with ITV to provide betting, casino and bingo games on the broadcaster's website. ITV edged down 0.9p to 111.4p.
Electra Private Equity climbed 23p to £16.48 as it sold the Dakota, Minnesota & Eastern Railroad Corporation for $1.5bn in cash to Canadian Pacific Railway, while lending group International Personal Finance added 12p to 224p after Merrill Lynch began coverage with a buy recommendation and 320p price target.
But Avis Europe, the car hire firm, fell 3.5p to 46.5p as JP Morgan moved from overweight to neutral.
And computer game retailer Game lost 10.25p to 180p as Dresdner Kleinwort issued a sell note.
It said: "The OFT has released its detailed paper on its decision to refer Game's acquisition of Gamestation to the Competition Commission. While acknowledging the combined entity's dominance in the market overall, the focus of concern is on a relatively small part of the business in value terms: pre-owned software. Should the Competition Commission see the links between strategy on pre-owned and dominance in mint as sufficiently strong, it may be difficult for Game to win the argument. There is still much to debate, but we see the initial findings as bearish for Game."
Lower down the market, Aim-listed telecoms company Vyke Communications added 15p to 116.5p. Analysts at Daniel Stewart recently began coverage with a strong buy recommendation and a 430p price target.
Finally Phil Edmonds' Central African Mining dropped nearly 16% to 27p after it withdrew its $1.44bn bid for Canada's Katanga Mining. The move would have expanded its presence in the Democratic Republic of Congo, but it already faces a move to revoke its licences in that country. A successful takeover of Katanga would have put the company on to the radar screen of major investors.