* FTSE 100 up 0.5 pct; set for biggest weekly gain since Feb
* Lingering Ukraine tension to keep market on edge - ETX
* Some profit-taking beginning, likely to continue - trader
* BHP rallies on spin-off plans
By Francesco Canepa and Lionel Laurent
LONDON, Aug 15 (Reuters) - Britain’s top equity index was on track to record its biggest weekly gain in six months as it rose on Friday, helped by a rally in heavyweight miner BHP Billiton.
Weak economic data in Britain, Europe and the United States has increased expectations for a continuation of ultra-loose monetary policy, bolstering equities on the FTSE, mirroring other indexes.
The FTSE 100 was up 43.50 points, or 0.7 percent, at 6,728.82 points by 1110 GMT, setting it on course for a 2.5 percent rise on the week, the largest since February.
The week was marked by a dovish message by the Bank of England, which led investors to push back expectations for an interest rate increase, and a general rebound in global equity markets after two weeks of steep declines.
Despite official data on Friday showing Britain had kept up its strong growth in the second quarter, with its yearly pace of expansion revised up to 3.2 percent, the Bank of England has said it is paying close attention to prospects for pay - which has been very weak in recent months.
Earlier this week, the Bank of England slashed its wage growth forecasts, leading money market investor to push back expectations for a UK interest rate rise until the first quarter of next year at the earliest.
Traders had welcomed conciliatory comments from Russian President Vladimir Putin on Thursday, but tensions between Ukraine and Russia remained high, keeping investors cautious about the market’s near-term prospect.
Dozens of heavy Russian military vehicles massed on Friday near the border with Ukraine, where a huge Russian convoy with humanitarian aid came to a halt as Moscow and Kiev struggled to agree on border crossing procedures.
“Short-term I’d probably be ‘short’ the FTSE because the issues in the Ukraine could influence this market and I think they are going to keep it on a knife’s edge,” Mark Priest, senior trader at ETX Capital, said.
Another London-based trader said that some clients were already taking profit on UK stocks after the past week’s gains and that he also expected a slight correction in the short term.
The FTSE is still down 2 percent since late July, dragged down by tension in Ukraine and the Middle East, as well as concerns about a tightening of the U.S. monetary policy.
Helping support the FTSE on Friday was global miner BHP Billiton, whose shares rose 2.4 percent after it declared its preference for a spin-off of its unwanted aluminium, manganese and nickel assets.
The spin-off would set the stage for the formation of a separate company that one report said could be worth $14 billion. (Editing by Alison Williams)