The FTSE 250 <.FTMC>, made up of firms that tend to be more reliant on the UK market than the exporter-heavy FTSE 100, shed 0.7%, its biggest one-day drop since Aug. 14.
The FTSE 100, meanwhile, closed flat after recovering from an initial slide with the help of a steep drop in sterling.
Worries over how, when or if the UK will leave the European Union have dragged down sterling for most of the year, helping the FTSE 100 climb month on month June and July.
Lawmakers met after the Supreme Court ruled on Tuesday that Prime Minister Boris Johnson had acted illegally in suspending parliament, ahead of the Oct. 31 deadline for Britain to leave the European Union, unless London requests an extension.
"It is not immediately clear what (parliament) will be able to achieve. It is more likely that this time will be wasted with political chicanery instead of striving to break the impasse (over Brexit)," CMC Markets analyst Michael Hewson said.
Among the blue-chip climbers, tobacco firms British American Tobacco and Imperial Brands rose 3.3% and 2.3%, respectively, after their U.S. rival Philip Morris ended merger talks with Altria.
Sainsbury's added 2% after the supermarket chain laid out a new plan to cut costs, speed up debt reduction and overhaul its store estate and financial services division as it reported better trading in the recent quarter.
Elsewhere, internet-based fashion retailer Boohoo managed a modest gain after its shares fell as much as 4% as result of profit taking.
Babcock climbed 6.8% to a near one-year high after the midcap-listed engineering services group said first-half trading was in line with expectations and stuck to its annual targets.
Aston Martin fell 4.2% after a bond issue that will see the firm's borrowing costs jump.
(Reporting by Shashwat Awasthi, Indranil Sarkar and Muvija M in Bengaluru; Editing by Bernard Orr and Edmund Blair)
By Muvija M and Indranil Sarkar