* FTSE 100 up 1.0 percent
* Vodafone gains after update beats expectations
* IAG boosted as easyJet ups guidance
By Tricia Wright and Stephen Eisenhammer
LONDON, July 22 (Reuters) - Banking stocks helped drive solid gains in Britain's top shares on Friday after the euro zone's leaders agreed a second rescue package for debt-stricken Greece, and new measures to stop the debt crisis from spreading through the region.
The UK benchmark index advanced 56.75 points, or 1.0 percent, to 5,956.64 by 1129 GMT, trading at near two-week highs.
Leaders of the euro zone announced late on Thursday a bailout for Greece that includes an extra 109 billion euros of government money as well as a significant contribution from private sector bondholders.
Investor confidence, beaten down since the Greek debt crisis erupted early last year, was given a lift as the package suggested that the euro zone was taking a comprehensive, long-term approach to the problem.
"I think that we at least have something that is tangible and constructive. Although it's an outline of a plan it seems to provide the structure that's required to move the whole thing forward," Mike Lenhoff, market strategist at Brewin Dolphin, said.
Royal Bank of Scotland led the market higher, firming 4.6 percent, in a strong banking sector which has rallied almost 7 percent in the last four trading sessions alone.
West LB raised its rating on RBS, to "neutral" from "reduce", and its earnings estimates, citing relief over progress being made on the euro zone's debt problems as one of the factors behind the upgrade.
The concrete action on the European debt crisis boosted insurers too, with deal talk also helping.
Aviva rose 2.2 percent after various newspaper market reports highlighted vague bid speculation surrounding the firm, with a price of 600 pence a share mentioned, and continental European names such as Allianz and Zurich Financial highlighted as likely predators.
BREAK OUT?
Despite recent volatility, London's blue chip index remains stuck in a trading range seen since the start of the year -- a high of around 6,105 to a low of around 5,600.
Phil Roberts, chief European technical strategist at Barclays Capital, however, is "cautiously optimistic" that we will break through the upper levels of this range, perhaps in the coming month.
"We think (the Greek deal) is quite encouraging but whether you get instant gratification or not though I'm not so sure... We're in the summer doldrums and we're prepared to be patient," he said.
U.S. stock index futures
Miners , which missed out on the previous session's gains after poor manufacturing data from top consumer China, found favour, with sentiment in the sector helped by a bullish update from Lonmin .
The world's third-largest platinum producer, up 2.3 percent, said platinum sales jumped over 74 percent in the third quarter.
Index heavyweight Vodafone contributed more than 5 points to the upside, ahead 1.7 percent, as the mobile telecom group's first-quarter trading update beat expectations.
On the FTSE 250 easyJet soared nearly 14 percent higher after the low-cost carrier raised full-year guidance when reporting strong growth in third-quarter revenue after it attracted more business travellers.
Large-cap peer International Airlines Group was aided by the news, up 2.7 percent, ahead of first-half results on July 29.
Elsewhere, comments from UBS buoyed International Power , 2.5 percent higher, with the broker adding the power generator to its key call list, saying it is well positioned for long-term growth at reasonable risk.
Drugmakers were hurt as the same broker cut the European pharma sector to "neutral", saying the shares will suffer from growing confidence over a resolution to Europe's debt crisis.
AstraZeneca fell 0.9 percent, topping the FTSE 100 fallers' list, with traders citing a downgrade by BofA Merrill Lynch to "neutral" from "buy". (Additional reporting by David Brett and Jon Hopkins; Editing by Jon Loades-Carter)
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