Babcock leads Britain's FTSE higher on nuclear contract win

* FTSE 100 up 0.2 pct but on course for quarterly drop

* Babcock nearly recoups last week's losses

* Miners extend gains on China stimulus optimism

By Tricia Wright

LONDON, March 31 (Reuters) - UK shares rose on Monday, ledby Babcock after a nuclear contract win and underpinned bymining companies on hopes for stimulus measures in China. Theblue-chip index was still set for its first quarterly drop sinceJune, though.

Babcock advanced 4.6 percent in brisk trade. Theengineering contractor and its U.S. peer Fluor were namedpreferred bidders for a 14-year, 7 billion-pound ($11.7 billion)contract to manage the decommissioning of Britain's nuclearsites.

The stock's gains almost recouped its losses last week, whenBabcock announced a big rights issue to fund the acquisition ofhelicopter firm Avincis.

"Positivity in the stock from what I call 'gold-platedgovernment contracts' (on account of both prestige and value)should extend the share price to my six-month target of at least1,550 pence," said Jordan Hiscott, a senior trader at GekkoGlobal Markets. The shares are currently trading at 1,351 pence.

Trading volume in Babcock was almost four times its 90-daydaily average. Turnover for the UK benchmark as a whole wasaround half the daily average.

Mining companies rose 0.9 percent. That tooktheir rally since their March 20 low to around 6 percent.

A string of weak economic data from China has led toexpectations the government will try to boost demand in theworld's largest metals consumer. The Chinese premier said lastweek China could act to support infrastructure investment.

But the sector retreated from an intraday peak as copperfell after hitting a two-week high earlier on Monday, The FTSE100 index consequently slipped from an earlier two-weekhigh to trade up 11.03 points, or 0.2 percent, at 6,626.61points by 1422 GMT.

"A bit of a bounce in the sector ... just on hopes thatcommodity prices will get a fillip from the Chinese stimulus -although actually metals prices haven't bounced as much as wemight have expected, which I think is why the markets aregenerally just tailing off," said Matt Basi, head of salestrading at CMC Markets.

"Until we've got further clarity on what's going to happen... it's probably wise for people just to be a bit more cautiousand take a bit of money off the table."

Rio Tinto led the miners higher with a 2.4 percentgain, as Credit Suisse reiterated the stock on its "focus" list.

"Potential for shareholder returns at Rio Tinto is largerand could be sooner than any of its peer group including BHP,"analysts at Credit Suisse wrote in a note.

The FTSE 100 index was still down almost 2 percent for theyear on the last day of the first quarter, set for its firstquarterly fall since last June. Concern over the economic impactof tension between Russia and the West, as well as weaker datafrom the United States and China, hit stocks early in the year.

"If you look at the sell-off we've had compared to all thenegative news we have, we would have seen a much worse sell-offif there wasn't underlying strength in this market to startwith," IG's Madden said.

($1 = 0.6011 British Pounds) (Additional reporting by Alistair Smout; Editing by Larry King)