By Dominic Lau

LONDON (Reuters) - Britain's FTSE 100 fell 1.55 percent on Wednesday as fears over more writedowns weighed on banks while firmer crude prices rekindled inflation worries, though miners offered some support.

The share index .FTSE ended down 85.9 points at 5,448.6, but fared better than other major European indexes because of the heavyweight miners.

"Investors do seem to re-establish their concerns in relation to the banking sector in particular and that feeds through to concerns as far as the retail arena as well," said Keith Bowman, an analyst at Hargreaves Lansdown.

Banks were the weakest sector on the index after U.S. bank shares tumbled overnight on news that JPMorgan Chase (JPM.N: Quote, Profile, Research) had racked up $1.5 billion (802 million pound) of losses so far this quarter on mortgage-linked assets.

Barclays (BARC.L: Quote, Profile, Research), HSBC (HSBA.L: Quote, Profile, Research), Lloyds TSB (LLOY.L: Quote, Profile, Research), HBOS HBOS.L, Royal Bank of Scotland (RBS.L: Quote, Profile, Research) and Standard Chartered (STAN.L: Quote, Profile, Research) shed 1.7 to 7.3 percent. StanChart also traded ex-dividend.

The Bank of England raised expectations of an interest rate cut possibly before the year-end as it forecast inflation falling below target in two years as the economy grinds to a standstill.

Trade-weighted sterling =GBP fell as low as 90.8, a level not seen since January 1997.

"If people are thinking the Bank of England is going to reduce interest rates sooner on the back of this, maybe accelerate (a cut by) a month or two, but they are warning that there are upside inflation risks to the two-year horizon and they are not taking any risk in interest rate policy if it endangers meeting the inflation target," said Neil Parker, market strategist at Royal Bank of Scotland.