Britain's FTSE gains on BoE stimulus expectations

* FTSE 100 index up 0.5 percent at close

* Vodafone, CRH among top gainers

* easyJet extends Thursday's losses (Adds detail and quote, updates prices at close)

By Kit Rees and Atul Prakash

LONDON, July 22 (Reuters) - Britain's top share index edgedhigher on Friday on hopes of further action from the country'scentral bank following poor UK economic data, with companieslike Vodafone and CRH gaining on positiveupdates.

Expectations grew that the Bank of England would do morenext month to stimulate growth after surveys showed Britain'seconomy appeared to be shrinking at the fastest rate since thefinancial crisis, following last month's Brexit vote .

The blue-chip FTSE 100 was up 0.5 percent at6,730.48 points at its close, having opened lower, with thebenchmark index posting its fifth straight week of gainsfollowing a gradual recovery after a post-Brexit sell-off.

"The FTSE 100 is actually reacting in a positive manner.That, of course, is down to expectations the Bank of England mayapply the economic stimulus markets absolutely love in August,"Augustin Eden, analyst at Accendo Market, said.

"We've been wondering about over-egged expectations due to alack of economic data to either confirm or refute the negativeimplications of the Brexit vote. The PMI data has now given usone good reason to expect an August rate cut, more quantitativeeasing or an extension of the funding for lending scheme."

Among other sharp movers, Vodafone rose 4.6 percentafter the world's second-largest mobile operator reported abetter-than-expected 2.2 percent gain in first-quarter organicservice revenue, marking an eighth consecutive quarterly rise.

CRH rose 2.6 percent after hiking its first-halfcore profit guidance.

However, gains were capped by some weaker companies. Marks &Spencer declined 3.6 percent after Barclays downgradedthe stock to "underweight" from "equal weight" and cut its pricetarget to 290 pence from 410 pence.

"The new management team's strategy of focusing on customersand product may be the start of a turnaround story, but thingscan get worse before they get better. We expect a painfultransition and material EPS downgrades," Barclays analystChristodoulos Chaviaras said in a note.

EasyJet also fell 3.7 percent after ratings andtarget price cuts from Raymond James and Investec, extending itslosses in the wake of Thursday's disappointing results update.

"EasyJet has endured just about everything the externalenvironment can throw at it over the last year, from repeatterrorism to ATC strikes, and - most far-reaching of all - theBrexit impact on sterling and demand from its key UK consumerbase. Through late summer and into winter, visibility is veryhazy, and further downgrades are a distinct possibility,"analysts at Barclays said in a note.

(Reporting by Atul Prakash; Editing by Larry King)