CORRECTED-UPDATE 1-British midcaps hit near 2-month high on upbeat Brexit views

(Corrects company descriptor in paragraph 9 to "fund supermarket", typos in paragraph 1, 7)

* BoE Governor Bailey says EU-UK trade deal possible

* UK govt mulls fresh lockdowns in northern England

* GVC Holdings surges on raising outlook

* FTSE 100 up 0.2%, FTSE 250 gains 0.5%

By Shashank Nayar

Oct 8 (Reuters) - British midcaps rose to their highest levels in nearly two months on Thursday following the Bank of England Governor's upbeat views on Brexit and as a slew of corporate results showed signs of improvement.

Bank of England Governor Andrew Bailey said he believed Britain and the European Union should be able to reach a trade deal, and that he did not expect the new wave of COVID-19 cases to be as damaging as the first. the market's gains, however, Prime Minister Boris Johnson's government said it is considering additional local COVID-19 restrictions for parts of northern England as the second wave of the novel coronavirus accelerates. mid-cap index .FTMC , considered a barometer for Brexit sentiment, gained 0.5%. Electrocomponent ECM.L was one of the biggest boosts after it said it expects the virus' impact to ease in the second half of the year. blue-chip index .FTSE gained 0.2%.

"With hopes of some support from the U.S. and with the pound going up, it has given the market an idea of some positive developments on the Brexit front which also helped mid-caps gain as they are better geared towards Brexit news," said Chris Bailey, a strategist at Raymond (NS: RYMD ) James.

In an earnings-heavy day, Ladbrokes (LON: LCL ) and bwin owner GVC Holdings GVC.L surged 7% to a two-year high as it raised its outlook for annual core earnings after posting a 12% rise in its revenue for the third quarter. tobacco company Imperial Brands IMB.L rose 1.3% on forecasting its full-year net revenue to be broadly flat and in line with market estimates. supermarket Hargreaves Lansdown HRGV.L dropped 3%after it said it took in 800 million pounds of net new business in the quarter to Sept. 30, but also said it saw weakening investor sentiment arising from COVID-19 and Brexit uncertainties.