* FTSE 100, 250 up 0.8 pct
* Rolls-Royce higher after rating upgrade
By Muvija M
Feb 13 (Reuters) - Britain's FTSE 100 climbed to its highest in over four months on Wednesday as miners gained and upbeat earnings lifted packaging firms DS Smith and Smurfit Kappa, while reports Brexit could be delayed eased some fears of a disruptive no-deal exit.
The FTSE index increased 0.8 percent after touching its highest level since Oct (Shenzhen: 000069.SZ - news) . 10, handily outperforming its European peers, while the midcaps were also up 0.8 percent.
But trading was limited with FTSE 100 turnover at 71 percent of the average 90-day daily volume while the FTSE 250's stood at two-thirds of the average.
British lawmakers will face a choice between Prime Minister Theresa May's divorce deal or a long extension to the March 29 deadline for leaving the European bloc, May's chief Brexit negotiator Olly Robbins was overheard saying in a Brussels bar.
The fifth-largest economy's exit remains unclear with just weeks until the March deadline with May set to return to parliament on Thursday to seek renewed backing for her plan to renegotiate her Brexit deal with Brussels.
"There is no time left for further negotiations, there is nothing that can change over the next few weeks except that the looming deadline will force MPs (BSE: MPSLTD.BO - news) hands," Neil Wilson, Markets.com analyst, said. "There is yet a tremendous risk that the UK leaves without a deal, but the deadline could change."
But data showed that inflation in Britain fell to a two-year low in January, dipping below the central bank's target and offering some respite to households ahead of Brexit.
DS Smith and London-listed shares of Smurfit Kappa topped the FTSE 100 leaderboard after the latter said the current year had started positively and reported strong results.
Smurfit Kappa surged 7 percent on its best day in a year and DS Smith added 4.5 percent.
Miners also supported the main index, rising 2 percent on their best day so far this month as London copper prices were higher after five sessions of losses.
Galliford led the FTSE 250 with a 6 percent gain, at its highest since end-November, after reporting higher first-half profit that topped Liberum estimates.
The upbeat results and hopes of a potential Brexit delay lifted blue-chip housebuilders Persimmon (Frankfurt: 882058 - news) , Barratt and Taylor Wimpey (LSE: TW.L - news) , which are among those most vulnerable to a no-deal Brexit.
On Wall Street, hopes that the ongoing U.S.-China trade talks could result in an agreement drove stocks higher.
That also lifted shares of Asia-focused companies HSBC and luxury brand Burberry, while those with a greater exposure to international markets, such as British American Tobacco and the world's largest spirits company Diageo (LSE: DGE.L - news) , also rose.
Whitbread ended 2.9 percent higher after saying it will buy back an extra 2 billion pounds ($2.57 billion) of shares using proceeds from its Costa Coffee sale and laid out aggressive expansion plans for its hotels business.
Supporting the midcaps was industrial stocks and Dunelm with a 3 percent rise after reporting a jump in first-half earnings.
($1 = 0.7778 pounds) (Reporting by Muvija M and Shashwat Awasthi in Bengaluru; Editing by Josephine Mason/Andrew Cawthorne/Ken Ferris)