* 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 Monday boosted by appetite for downtrodden insurers and resurgent miners, though the British blue chip index was still set for its first quarterly fall since June.

Insurers rallied, with Resolution, Aviva (Other OTC: AIVAF – news) and Legal & General (LSE: LGEN.L – news) all up 1 percent to 3.2 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, but we’ve only recovered about half of the losses,” David Madden, analyst at IG (LSE: IGG.L – news) , said.

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

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

Miners rose 1.4 percent to take their rally since March 20 to 5.7 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.

Rio Tinto (Xetra: 855018 – news) led the miners higher with a 2 percent gain, as Credit Suisse (NYSE: CS – news) 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 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 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 as well as 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. (Editing by Andrew Heavens)