Britain's FTSE set for quarterly fall despite appetite for insurers

* FTSE 100 up 0.6 pct

* Insurance firms rally after regulator's "blunder"

* Miners continue strong rally

* Index set for first quarterly fall since June

By Alistair Smout

LONDON, March 31 (Reuters) - UK shares rose on Mondayboosted by appetite for downtrodden insurers and resurgentminers, though the British blue chip index was still set for itsfirst quarterly fall since June.

Insurers rallied, with Resolution, Aviva andLegal & General all up 1 percent to 3.2 percent havingslumped in the previous session.

The life insurance sector fell as much as 7.1 percent onFriday on concerns about the extent of a leaked investigation bya UK regulator, before regaining some of its losses after theregulator said the investigation would be limited.

The shares closed 2.6 percent lower on Friday and therecovery continued on Monday.

"The insurance sector is seeing a bit of a relief rally. Theclarification on Friday afternoon helped the insurance sectorpull back from the lows, but we've only recovered about half ofthe losses," David Madden, analyst at IG, said.

"For as long as this is hanging of the insurance sector,there will be concerns though, even if in the short term we seebargain hunting."

A 3.2 percent rise in Resolution still saw it 4 percent offof its closing price on Thursday.

Miners rose 1.4 percent to take their rallysince March 20 to 5.7 percent.

After a string of weaker data reports from China,expectations are building over possible intervention by thegovernment to boost demand in the world's largest metalsconsumer. The Chinese Premier said last week China could act tosupport infrastructure investment.

Rio Tinto led the miners higher with a 2 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.

By 0740 GMT, the FTSE 100 index was up 0.6 percent,or 34.35 points, at 6,649.93, at a two week high.

However, the index was still down 1.5 percent for the yearon the last day of the first quarter, and set for its firstquarterly fall since June last year.

Concerns over the economic impact of ongoing tensionsbetween Russia and the West over Ukraine, as well as weaker datafrom the United States as well as China, hit stocks in the earlypart of 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. (Editing by Andrew Heavens)