Britain's FTSE rallies for second week, RBS plummets

* FTSE 100 (NasdaqGS: Z - news) up 1.4 pct

* RBS (LSE: RBS.L - news) slumps on eighth full-year loss

* Pearson (Amsterdam: PR8.AS - news) gains after results

* Miners rally, track copper price (Adds detail)

By Kit Rees and Alistair Smout

LONDON, Feb 26 (Reuters) - British shares rallied on Friday and posted a second week of gains in a row, boosted by a rally in publisher Pearson and London Stock Exchange Group , though Royal Bank of Scotland reported its eighth full-year loss in a row.

RBS shares plunged 7.1 percent and were set for their biggest daily loss since June 2012.

The state-backed bank reported a full-year loss of 1.97 billion pounds ($2.75 billion), weighed down by further restructuring and litigation costs.

"Despite better progress on capital, RBS has reported a disappointing set of numbers with both revenue and costs light due to weak investment bank performance," analysts at Jefferies said in a note.

It has not turned a profit since its 2008 government bailout during the financial crisis, and its update contrasted with Lloyds, which surprised investors with a dividend in the previous session.

"Overall RBS' results are in stark contrast to yesterday's figures from Lloyds, and demonstrate just how much daylight has opened up between the banks since the financial crisis," Laith Khalaf, senior analyst at Hargreaves Lansdown (Other OTC: HRGLF - news) , said in a note.

"RBS is heading in the same direction as Lloyds and will probably get there, but it's going to be a long haul."

RBS's woes did not offset broader gains on the FTSE 100 index, which rose 1.4 percent to close at 6,096.01 points, posting its second weekly gain in a row.

Despite a 10 percent rally since mid-February, the index remains down 2.3 percent this year.

Education and media company Pearson plc was up 4.3 percent after posting results in line with analysts' expectations, and saying that its restructuring should deliver profit at or above 800 million pounds in 2018.

London Stock Exchange rose 7 percent, taking gains this week to over 13 percent. Its proposed merger with Deutsche Boerse, announced on Tuesday, has been well received by investors, and on Friday the firms said that the merger was insulated from risks around Britain's vote, scheduled for June, on whether to leave the European Union.

Mining stocks also rose, with Glencore (Xetra: A1JAGV - news) , BHP Billiton and Rio Tinto (Other OTC: RTPPF - news) all up between 3 to 8 percent after the price of copper firmed on Friday with the focus shifting to a G20 meeting in Shanghai.

China is seeking to restore confidence in its giant, metals-hungry economy, but Germany all but ruled out any coordinated stimulus to counter a deepening global chill.

Burberry Group (Other OTC: BBRYF - news) benefited from a broker upgrade from Nomura, rising 7.5 percent after Nomura upgraded its rating on the stock to 'buy'.

"Since Burberry announced a review of the global market, its initiatives, efficiency programmes, productivity and capital allocation, expectations have risen in anticipation of change," analysts at Nomura said in note.

"We see potential for a greater valuation if Burberry can successfully drive productivity measures, while being more disciplined on cost and capital allocation."

IAG closed 3.1 percent lower despite the British Airways owner providing an upbeat outlook for profit this year, with some traders citing concerns that a strong dollar might increase costs. It also was hit by a rise in oil prices on Friday. (Editing by Ruth Pitchford)