* FTSE 100 down 0.9%, FTSE 250 down 1%
* Poll shows Conservative lead narrowed
* U.S.-China trade worries also weigh
* Ocado surges on Aeon partnership
* Daily Mirror publisher jumps among small-caps (Adds news items, analyst comment, graphic, closing prices)
By Shashwat Awasthi
Nov 29 (Reuters) - London-listed shares most exposed to the domestic economy took a beating on Friday after a poll showed the Conservative Party's lead over the opposition Labour Party had narrowed ahead of Britain's Dec. 12 election.
Prime Minister Boris Johnson's Conservatives now hold an 8 point lead over Labour, compared with 10 a week ago, according to a Panelbase poll.
The mid-caps snapped a five-day winning streak and shed 1%, their worst day in almost two months. JPMorgan's basket of London-listed companies that make their cash at home skidded 2%.
Blue-chip banks RBS and Lloyds gave up 2.5% each, while retailers and housebuilders also eased as the main index slid 0.9%.
Markets have been buying into domestic shares amid hopes that Johnson, who has said that he will deliver Brexit by Jan. 31 if he retains power, will win a majority and put an end to 3-1/2 years of uncertainty over Britain leaving the bloc.
The poll exacerbated a decline in domestic firms after a survey earlier showed British consumer confidence reeling at its joint-lowest level since November 2013.
Johnson's comment that he wanted to keep in place preparations the government has made for the possibility of a no-deal Brexit also fanned anxiety.
Bucking the trend, Ocado jumped 10% on its best day since February, after signing a technology partnership with Japan's biggest supermarket operator, Aeon.
"The deal has settled investor nerves which had been showing signs of fraying on a lack of new partnerships and rumours of trouble with its Kroger marriage," Markets.com analyst Neil Wilson said.
Trading volumes were once again low with Wall Street working a half-day session after Thanksgiving.
Still, the FTSE moved further away from a near four-month high hit earlier this week, as trade-sensitive stocks fell on fears that the U.S. ratification of a law backing Hong Kong protesters would dent progress made in trade talks with China.
However, OANDA analyst Jeffrey Halley said, given China's issues around corporate debt and regional bank credit quality, the country could ill-afford to waste any progress made on trade talks.
Despite downbeat trading on Friday, the mid-caps enjoyed a third straight month of gains and the biggest since January. The blue-chip bourse also posted monthly gains for the eighth month this year.
Among small-caps, Reach soared 15% on its best day since November 2013, after the Daily Mirror publisher said it was confident of meeting annual targets.
Commercial vehicle rental firm Northgate tumbled 10% after a deal to buy accident claims handler Redde, which added 2.2%.
(Reporting by Shashwat Awasthi in Bengaluru; Editing by Shounak Dasgupta)