Britain's FTSE gains on BoE stimulus expectations

* FTSE 100 index up 0.5 percent at close

* Vodafone, CRH (EUREX: 558474.EX - news) 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 edged higher on Friday on hopes of further action from the country's central bank following poor UK economic data, with companies like Vodafone and CRH gaining on positive updates.

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

The blue-chip FTSE 100 was up 0.5 percent at 6,730.48 points at its close, having opened lower, with the benchmark index posting its fifth straight week of gains following 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 may apply 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 a lack of economic data to either confirm or refute the negative implications of the Brexit vote. The PMI (Other OTC: PMIR - news) data has now given us one good reason to expect an August rate cut, more quantitative easing or an extension of the funding for lending scheme."

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

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

However, gains were capped by some weaker companies. Marks & Spencer declined 3.6 percent after Barclays (LSE: BARC.L - news) downgraded the stock to "underweight" from "equal weight" and cut its price target to 290 pence from 410 pence.

"The new management team's strategy of focusing on customers and product may be the start of a turnaround story, but things can get worse before they get better. We expect a painful transition and material EPS downgrades," Barclays analyst Christodoulos Chaviaras said in a note.

EasyJet (Other OTC: EJTTF - news) also fell 3.7 percent after ratings and target price cuts from Raymond James and Investec (LSE: INVP.L - news) , extending its losses in the wake of Thursday's disappointing results update.

"EasyJet has endured just about everything the external environment can throw at it over the last year, from repeat terrorism to ATC strikes, and - most far-reaching of all - the Brexit impact on sterling and demand from its key UK consumer base. Through late summer and into winter, visibility is very hazy, and further downgrades are a distinct possibility," analysts at Barclays said in a note.

(Reporting by Atul Prakash; Editing by Larry King)