UPDATE 1-RSA Insurance surges on renewed bid talk -traders

(Adds analyst comment, background, updates shares)

LONDON, Aug 28 (Reuters) - Shares in RSA Insurance (RSA.L) surged nearly 6 percent by 1300 GMT on Thursday as traders cited renewed market talk of bid interest from Zurich Financial Services (ZURN.VX).

RSA, formerly known as Royal & Sun Alliance, declined to comment on the rumour.

A spokesman for Zurich Financial, whose shares were up 1.8 percent, said the company never comments on market rumours or speculation.

Another trader said RSA shares were also buoyed by comments from Swiss Life (SLHN.VX) that it had not ruled out more acquisitions.

More than 14 million RSA shares changed hands by 1055 GMT, compared with a full-day average of 19.2 million in the past 30 days.

But city analysts dismissed the rumours that Zurich Financial is the bidder. "It's an old rumour, there is not much credibility," said one equities analyst.

Another analyst said Zurich Financial was one of a number of companies that could possibly bid for RSA, including those that were in the running to buy Royal Bank of Scotland's (RBS.L) insurance businesses.

Zurich Financial pulled out of the auction after being considered the frontrunner to buy the asset. This makes it even less of a contender for RSA, said the second analyst.

Germany's Allianz (ALVG.DE) and U.S. insurers Allstate (ALL.N) and Travelers (TRV.N) were also linked to the auction. (Additional reporting by Sven Egenter) (Reporting by Lorraine Turner and Dominic Lau)