China data fuels cyclical rebound on Britain's FTSE

* FTSE 100 rises 0.5 percent

* Banks and miners lead rise as economic optimism increases

* FTSE still set for first weekly fall this year

* Vodafone, Aggreko benefit from bank upgrades

By Alistair Smout

LONDON, Feb 8 (Reuters) - Britain's FTSE 100 rebounded on Friday, led up by banks and miners after forecast-beating Chinese trade data reinforced hopes the global economy is growing.

The blue-chip index remained on course for its first weekly loss this year, however, after closing just off a 4 1/2-year peak last Friday.

China's exports and imports rose more than expected in January, pointing both to stronger domestic demand and to a recovery in the world economy as a whole.

The data prompted a surge in cyclical stocks such as miners and banks, which rise and fall with optimism about the economy.

Banks led sectoral gainers, up 1.6 percent, with Asia-focused HSBC - the biggest weight on the index -contributing 9 points to the FTSE's advance. The sector nevertheless looked set for its first weekly loss since November following sharp falls earlier in the week.

"The China trade numbers were really fantastic, and it is helping the market, especially commodity stocks. It's even lifted sentiment around the banks too," said Fawad Razaqzada, market strategist at GFT Markets.

"But the rally that we had at the start of the year went too far too quickly, and now we are seeing a bit of a pullback, even though things are a little firmer today," he added, saying that lower highs and lower lows on the FTSE made the technical picture look bleaker than last week.

The FTSE 100 was up 29.20 points, or 0.5 percent, at 6,257.62 points by 1213 GMT, recouping some of the previous session's 1.1 percent drop but still set to post its first weekly loss this year.

Since posting its biggest one-day fall in three months on Monday, the index has failed to close above 6,300 all week, following a rally to a 4-1/2 year peak of 6,354.46 last week.

"The 6,300 becomes a key level in the FTSE again. That has been a bit of a technical buffer recently, both as support and as resistance, so if we close above that it would be quite a positive finish to the week," said Matt Basi, head sales trader at CMC Markets.

Alongside with generally bullish market sentiment, broker upgrades helped lend support to individual stocks.

Vodafone added nearly 6 points to the index, gaining 1.7 percent after Bank of America Merrill Lynch upgraded it to 'buy' seeing several positive outcomes for its 45 percent holding in Verizon Wireless and noting the shares' recent underperformance versus the broad UK index.

Aggreko rose 2.1 percent to near the top of the FTSE 100 leaderboard, as analysts cited an HSBC upgrade on the stock to 'neutral'. Traders also mentioned renewed speculation of a possible takeover of the temporary power provider as a possible factor.

"From here, the stock's trajectory hinges on how quickly growth recovers," the banks says.

"We can see short-term headwinds, but this is now firmly in the price." (Additional reporting by Toni Vorobyova and Tricia Wright; Editing by Catherine Evans)