Shares in the mobile phone giant rose more than 6 per cent as a strategy update from new chief executive Vittorio Colao was well received by investors.

But the FTSE 100 Index sank 157.23 points to 4246.69 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 figures from coffee giant Starbucks.

In London, Vodafone was one of only a handful of blue-chips in positive territory after Mr 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 63/4p to 115p.

Miners accounted for much of the Footsie's fall after giving back gains seen on Monday in the wake of the Chinese economic stimulus package.

Vedanta Resources was the leading blue-chip casualty, losing 14 per cent, or 115p, to 683p, followed by Eurasian Natural Resources, 311/4p lighter at 283p.

Meanwhile, Crude oil slipped as low as 58 dollars 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 173/4p to 1773/8p. HBoS was 81/2p lower at 991/4p after Prime Minister Gordon Brown said there were no serious bidders for the firm other than white knight merger partner Lloyds.

Vodafone's half-year results announcement gave a brief respite for telecoms stocks from the wider market falls, but by the close Cable & Wireless was 1/4p down at 1413/4p. BT Group also lost earlier advances to slip 25/8p to 110p ahead of its own results later in the week.

Outside the top flight, Yell made gains after posting half-year results. The directories firm maintained full-year targets and was rewarded with a rise of 31/4p to 683/4p.

Materials group Cookson was a prominent FTSE 250 faller after it said its 2008 performance would fall short of management expectations. The company, which declined 42p to stand at 130p, blamed poor demand from steel manufacturers.

It was followed on the fallers' board by housebuilder Taylor Wimpey – 21/2p lower at 103/4p after the firm said it did not expect any short-term improvement in trading conditions.

Doubts surrounding its ability to secure debt refinancing amid talks with its banks also weighed heavy on the stock.

Elsewhere, hand-held computer and technology group Psion saw shares plunge more than 16 per cent, or 111/4p, to 581/4p after it warned second-half profits would fall below the first half.

The biggest Footsie risers were Vodafone, Tesco ahead 85/8p to 3315/8p, GlaxoSmithKline up 121/2p to 1220p and Capita 3p better off at 644p. Biggest fallers were Vedanta Resources and Man Group, which finished 323/4p lower at 248p.