* FTSE closes down 0.5 pct at 6,573.13 points
* L&G and insurers hit by pension reforms in UK budget
* William Hill and Ladbrokes impacted by new tax
LONDON, March 19 (Reuters) - Britain's top shares fell on Wednesday as major insurance stocks suffered a sell-off after changes announced in the UK budget threatened their profits.
The budget also dealt a blow to gambling companies such as William Hill and Ladbrokes after the government announced a new tax on certain betting machines.
The drop in insurers' shares took the most points off the blue-chip FTSE 100 index, which closed down by 0.5 percent, or 32.15 points, at 6,573.13.
British finance minister George Osborne's budget scrapped a requirement that pensions savings be used to buy an annuity, sending the shares of insurance companies tumbling.
Legal & General plunged 8.4 percent, with trading volumes in the stock coming in at nearly nine times its three-month daily average.
Rival insurers Aviva and Resolution also fell by 5.2 percent and 4.6 percent respectively.
"The annuity business was a very solid profit driver for the insurers, so you might expect to see some profit downgrades," said Dafydd Davies, senior trader at Prime Wealth Group.
For HIGHLIGHTS on UK budget see
UK inflation, unemployment and base rates:
GAMBLING COMPANIES FALL
William Hill fell 6.8 percent and competing gambling company Ladbrokes dived 11.7 percent after Osborne also unveiled a new tax on fixed-odds betting terminals.
William Hill said the tax increase would have cost it 16 million pounds ($26.7 million) had it been in force last year and analysts forecast a cost of about 20 million pounds for Ladbrokes when the tax takes effect next year.
The FTSE index, which rose 14.4 percent in 2013 and came close to a 13-year high in January, is now down by 2.6 percent since the start of 2014.
However, many traders expect it to recover later this year and reach a record high of 7,000 points as the UK's economic recovery continues. The British government's budget watchdog on Wednesday raised its economist growth forecast for this year to 2.7 percent, from 2.4 percent previously, and estimated growth of 2.3 percent next year, against 2.2 percent previously.
"We're still in an uptrend for now. I expect record highs to come mid-April or early May," said JNF Capital trader Rick Jones. ($1 = 0.6014 British Pounds) (Additional reporting by Tricia Wright; Editing by Larry King and Susan Fenton)