Britain's FTSE forges ahead as Shire surges

* FTSE 100 ends up 0.6 pct at 6,378.04 points

* Shire lifted by talk it may bid for a U.S. rival

* Burberry extends previous day's slide

* GKN hit by estimates downgrade from Liberum

By Sudip Kar-Gupta

LONDON, Oct 16 (Reuters) - Britain's top share index rose onFriday, lifted by drugmaker Shire, whose shares climbedon speculation it could be lining up a bid for a U.S. rival.

The blue-chip FTSE 100 index ended up 0.6 percent at6,378.04 points.

Shire rose 3.2 percent, which traders attributed tospeculation it was preparing a bid for U.S. peer Radius Health,seen as a potentially good deal for the British group. Shiredeclined to comment on the situation.

Traders added that expectations of new stimulus measuresfrom China, the world's second-biggest economy, were givingequity markets a further lift.

Signs of a slowdown in China knocked back world stockmarkets in the third quarter, with the FTSE still down 4 percentsince the start of 2015, and down around 10 percent from anApril record high of 7,122.74 points.

"With half an eye on the possibility of more central bankstimulus, stocks have edged out a positive finish to the week,"said CMC Markets analyst Jasper Lawler.

Burberry was among the worst performing stocks onthe FTSE, falling 1.9 percent to extend the previous session'sslide, as a profit warning late on Thursday from Hugo Boss hit luxury goods companies.

Hugo Boss cut its 2015 sales and profit outlook, while pricetarget cuts from brokers on Burberry's shares on Friday addedfurther pressure to the British company, whose shares hadalready slumped 8.3 percent on Thursday on weak sales growth.

GKN and other engineering stocks also fell afterbrokerage Liberum cut estimates on the sector.

(Additional reporting by Kit Rees; Editing by Toby Chopra andMark Potter)