By Shashwat Awasthi and Yadarisa Shabong
(Reuters) - British firms more exposed to the domestic economy took a hit on Tuesday after Prime Minister Boris Johnson's hard line in talks with the European Union rekindled fears of a hard Brexit, while NMC Health plunged on Muddy Waters' short attack.
Johnson will use his control of parliament to outlaw any extension of the Brexit transition period beyond 2020 - his boldest move since winning a large majority in last Thursday's election, and one that spooked financial markets.
That pushed the midcap FTSE 250 (FTMC) down more than 1% on its worst day in more than two months. The index had touched successive all-time highs in the last two sessions after Johnson's election victory.
However, London's main index FTSE 100 (FTSE) eked out a 0.1% gain, lifted by trade-sensitive stocks amid optimism around a proper agreement between China and the United States.
Oil majors BP (L:BP) and Shell (L:RDSa) along with HSBC (L:HSBA) were the biggest boost.
Weighing on the index was Unilever's (L:ULVR) 7% drop, its steepest one-day decline in more than a decade, after cutting its 2019 sales growth view.
NMC Health Plc (L:NMC) also capped gains after losing nearly one-third of its value.
Finablr (L:FINF), which was founded and co-chaired by Bavaguthu Raghuram Shetty - also the founder and co-chairman of NMC Healthcare, dropped 10.8%, with traders citing a read-across from NMC.
JPMorgan's basket of London-listed companies <.JPDEUKDM> that make their cash in domestic markets dropped 2.2%, having soared more than 9% since Friday over the election euphoria.
An index of housebuilders (FTNMX3720) shed 2.4%.
"The reality check of the possibility of a no-deal Brexit, while still over a year away, has tempered some of the enthusiasm from last Thursday's election result," CMC Markets analyst Michael Hewson said.
The steepest faller among midcaps was Senior Plc (L:SNR), which makes parts for Boeing Co's (N:BA) 737 MAX jets, tumbling 11% on its worst day in over three years after the U.S. planemaker's decision to suspend production of the MAX jets.
Shares of other Boeing (N:BA) suppliers as well as those of airlines also slipped, with British Airways owner IAG (L:ICAG) and engine maker Rolls-Royce (L:RR) shedding more that 2% each.
Meanwhile, blue-chip banks Lloyds (L:LLOY) and RBS (L:RBS) tumbled 5.9% and 3% respectively after failing to impress in the 2019 stress test, while new capital rules are expected to hit their investor payout plans.
Petrofac (L:PFC) fell 6.6% after the oilfield services provider forecast lower annual revenue.
