At 1007 GMT, the FTSE 100 was down 1 percent, on track for its worst day since Nov. 22. The FTSE 250 was down 0.3 percent.
On Tuesday, May suffered embarrassing defeats at the start of five days of debate leading up to a Parliamentary vote on Dec. 11 on her proposed agreement.
"Most measures of sentiment and positioning in the UK show a loathing of all UK assets. Investors just have a revulsion for the UK," said Paul O'Connor, head of the multi-asset team at Janus Henderson.
After a European Court of Justice opinion on Tuesday that Britain could unilaterally revoke Brexit if it wanted, JPMorgan said it now reckons the chances of Britain remaining in the bloc have increased to 40 percent from 20 previously.
Still, companies continue to prepare for the possibility of no deal.
Fashion retailer Joules Group Plc said on Wednesday it would set up a distribution facility in the EU and bring inventory of its 2019 spring-summer collection into the UK earlier than usual as part of its contingency plan.
Oil stocks were the biggest drag on the blue chips, down 1.8 percent. The price of crude fell on signs of an economic slowdown, before a meeting at which OPEC is expected to decide on supply cuts.
Not far behind were financials. Hargreaves Lansdown was on track for its worst day since Oct. 23 after Morgan Stanley cut the stock to underweight, noting that a weaker UK economic outlook is likely to hit 2019 flows, and weaker stockbroking fees, among other pressures.
"We see several new headwinds on the horizon which could derail the long-term growth story and trigger share price underperformance," the analysts said.
After a downbeat note from Credit Suisse on the problems facing asset managers, alternative investment manager Man Group on the FTSE 250 fell 2.8 percent.
However, Barclays banking analysts said they saw room for material share price gains by UK banks and housebuilders if the Brexit deal passed in parliament.
Berkeley Group was up 3.7 percent, topping the blue-chip leader board. Taylor Wimpey gained 3.1 percent.
Among other gainers, biotech company Shire was up 2.6 percent after Takeda Pharmaceutical shareholders approved a $59 billion takeover of the London-listed company, the biggest overseas acquisition by a Japanese company.
On the FTSE 250, Stagecoach rallied 8.7 percent after its better-than-expected results. Embattled travel operator Thomas Cook rallied more than 16 percent, its first gains since its profit warning last week.
One trader described it as a "dead-cat bounce" after shares lost 60 percent of their value over the past week. The company's bonds hit record lows in early dealings after Moody's downgraded its rating.
Shares in valve manufacturers Rotork and Weir , which supply the oil industry, tumbled after US energy services firm Schlumberger gave a warning on Tuesday, saying a drop in fracking activity would hit its North America revenues.