* FTSE 100 up 0.2 pct, but on course for quarterly drop
* Babcock nearly recoups last week's losses
* Insurers rally after regulator's "blunder"
* Miners extend gains on China stimulus optimism
By Tricia Wright
LONDON, March 31 Britain's top shares rose on
Monday, led by Babcock on the back of a nuclear contract win,
and underpinned by appetite for downtrodden insurers and
Babcock advanced 4.5 percent, the top FTSE 100 riser
by some margin in brisk trade, as the engineering contractor and
its U.S. peer Fluor were named preferred bidders for a 14-year,
7 billion pound ($11.7 billion) contract to manage the
decommissioning of Britain's nuclear sites.
The share price gains saw Babcock almost recoup the losses
seen last week when it announced a big rights issue to fund the
acquisition of helicopter firm Avincis.
"Positivity in the stock from what I call 'gold plated
government contracts' (on account of both prestige and value)
should extend the share price to my six-month target of at least
1,550 pence," Jordan Hiscott, senior trader at Gekko Global
Markets, said. The shares are currently trading at 1,350 pence.
Trading volume in Babcock was almost three times its 90-day
daily average around mid session, compared with turnover of
around one third of the daily average for the UK benchmark as a
Insurers rallied, with Resolution, Aviva and
Legal & General all up 0.8-1.8 percent, having slumped
in the previous session.
The life insurance sector fell as much as 7.1 percent on
Friday on concerns about the extent of a leaked investigation by
a UK regulator, before regaining some of its losses after the
regulator said the investigation would be limited.
The shares closed 2.6 percent lower on Friday and the
recovery continued on Monday.
"The insurance sector is seeing a bit of a relief rally. The
clarification on Friday afternoon helped the insurance sector
pull back from the lows," David Madden, analyst at IG, said.
"For as long as this is hanging (over) the insurance sector,
there will be concerns though, even if in the short term we see
A 1.7 percent rise in Resolution still left it more than 5
percent shy of its closing price on Thursday.
Miners rose 0.7 percent to take their rally
since a March 20 low to nearly 6 percent.
After a string of weaker data reports from China,
expectations are building over possible intervention by the
government to boost demand in the world's largest metals
consumer. The Chinese Premier said last week China could act to
support infrastructure investment.
But the sector traded off its session highs, with copper
down slightly after hitting a two-week high earlier on Monday.
"A bit of a bounce in the sector this morning just on hopes
that commodity prices will get a fillip from the Chinese
stimulus - although actually metals prices haven't bounced as
much as we might have expected which I think is why the markets
are generally just tailing off now," Matt Basi, head of sales
trading at CMC Markets, said.
"Until we've got further clarity on what's going to
happen... it's probably wise for people just to be a bit more
cautious and take a bit of money off the table."
Rio Tinto led the miners higher with a 2.1 percent
gain, as Credit Suisse reiterated the stock on its "focus" list.
"Potential for shareholder returns at Rio Tinto is larger
and could be sooner than any of its peer group including BHP,"
analysts at Credit Suisse wrote in a note.
By 1119 GMT, the FTSE 100 index was up 12.85 points,
or 0.2 percent, at 6,628.43 points, having hit a two-week high
earlier on Monday.
However, the index was still down almost 2 percent for the
year on the last day of the first quarter, and set for its first
quarterly fall since June last year.
Concerns over the economic impact of ongoing tensions
between Russia and the West over Ukraine, as well as weaker data
from the United States and China, hit stocks in the early part
of the year.
"If you look at the sell-off we've had compared to all the
negative news we have, we would have seen a much worse sell-off
if there wasn't underlying strength in this market to start
with," IG's Madden said.
($1 = 0.6011 British Pounds)
(Additional reporting by Alistair Smout; Editing by Andrew