The prospect of another cut in interest rates early next year had investors reaching for housing stocks and trimming their holdings in defensive sectors from mining and utilities to food producers and supermarkets.

Minutes of the Bank of England's Monetary Policy Committee revealed that members voted 9-0 this month in favour of the quarter-point cut in interest rates to 5.5 per cent, and the tone indicated that another is on the cards.

After sell-offs for most of this week, Persimmon raced up 21p to 790p and Barratt Developments gained 11 1/2p to 4501/2p.

Taylor Wimpey, which aims to sell more than 20,000 homes in the UK and has a large North American presence, rose 3 3/4p to 199 3/4p, making up for most of yesterday's sell-off after US government data showed that single-family home starts fell to the lowest level since April 1991.

Sales at all of the big three housebuilders have been hit since the summer after the credit squeeze wrung the life out of the "back-to-school" autumn selling season. Housebuilders are hopeful that another cut in interest rates will kick-start the usual spring selling season.

Taylor Wimpey, the merger of the old Wimpey and Taylor Woodrow companies, announced earlier this year that it would start buying back shares when its stock was trading at about 300p.

The prospect of possible cheaper money helped Alliance & Leicester, up 6p to 641p. Moody's, the rating agency, yesterday put the high street bank's financial strength rating and long-term bank deposite ratings on review for a possible downgrade because it is paying more for funds in the money markets.

Shares in the media group Trinity Mirror eased 0.2 per cent to 337.75p on news that it was to start a £175 million ($353 million) share buyback programme following clearance from the pensions regulator for a return of capital to shareholders.

The FTSE 100 index fell 14.1 points to 6,265.6, however, as sell-offs in the mining sector — one of the largest constituents of blue-chip shares — pushed the index into red.

Anglo American, down 88p to £28.96, led the fallers. Antofagasta followed suit, down 15p to 672p and Vedanta Resources dropped 15p to 672p. BHP Billiton, the suitor for Rio Tinto, fell 12p to £14.86. Rio lost 55p to £50.03.

A downgrade for InterContinental Hotels Group from "equal weight" to "overweight" by analysts at Morgan Stanley pushed the hotel operator down 25p to 872p. Morgan Stanley notes that revenue per available room (RevPar), the key sales indicator for the hotels sector, is slowing faster than it thought and the repositioning of Holiday Inn was likely to lead to a higher exit rate for guests.

Morgan Stanley slashed its expected earnings for InterContinental both by 4 per cent for 2008 and by 6 per cent for 2009.

Unilever, one of the best performers for 2007, shed 19p to £17.64 after a strong run this week, and Tesco lost 3 3/4p to 460 1/4p.

Continued nervousness about consumer spending hit Capital & Regional, down 34p to 412p. Britain's largest owner of retail warehouses has seen its share price fall by 76 per cent this year, making it the worst performing property stock and one of the worse performing shares in the FTSE 250.

Savills, the commercial property and housing agent, fell 16p to 270p over worries that the autumn freeze on property deals would continue long into the new year. Half-year results out today from DTZ, a rival commercial property agent, failed to help confidence as it gave warning that the more difficult investment markets had put margins under pressure and affected reported profit. DTZ tumbled 29p to 257p.

Dealing in the Far East closed with Tokyo's Nikkei 225 index closing down 177.40 points to 15,030.5.

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