FTSE flat; gains in miners, insurers offset by weak oils

* Miners rally as metal prices firm

* Life insurers strong on M&A speculation led by L&G

* Oils majors weak on demand concerns

By Jon Hopkins

LONDON, Sept 30 (Reuters) - Britain's top share index was flat at midday on Wednesday as gains by miners, life insurers and banks in the last session of a strong quarter was countered by weakness in oil majors and retailer Marks & Spencer .

By 1109 GMT the FTSE 100 <.FTSE> was 0.7 point higher at 5,160.43 and on course for its best quarterly performance since the index was launched in 1984.

Hefty gains over the course of the summer have seen British blue chips rise 21.4 percent in the three months to September, although the index is still 4.7 percent below its level just over a year ago before the collapse of Lehman Brothers.

"The rally has undoubtedly been impressive, but is it sustainable over another quarter?," said David Jones, chief market strategist at IG Index.

"Perhaps because of this sort of question, there is a note of caution lingering over the UK index today as traders take stock before a new month begins," he said.

Miners were the best performing sector, having lagged in Tuesday's session with market heavyweights benefiting from firmer metal prices as the dollar lost some recent strength.

Lonmin , Anglo American , Xstrata and Rio Tinto added 0.8-2.6 percent.

Life insurers also saw strong demand with the sector boosted by a resurgence of M&A speculation.

Legal and General was a top FTSE 100 riser, up 5.5 percent following recent reports it could be a target for a number of companies, and supported too as Deutsche Bank raised its rating on the firm to 'hold' from 'sell'.

RSA Insurance , Aviva , Standard Life , and Prudential also rallied 1.6-4.4 percent, underpinned by Deutsche Bank's upbeat note on life insurers.

Banks were higher as a sector, with RBS , Lloyds Banking Group , Barclays and Standard Chartered all up 0.4-1.8 percent as recent cash calls from peers reassured investors about the path of recovery

Among other financials, Man Group rose 5.5 percent after the hedge fund manager said currency movements and slowing outflows lifted funds under management to an estimated $43.8 billion at end-September, at the top end of forecasts.

Software company Sage Group climbed 2.9 percent after Morgan Stanley upped its stance to 'overweight' from 'equal-weight' as it turns to stock picking in the technology sector for what it describes as the next leg of recovery.

M&S WEAK AFTER UPDATE

Marks & Spencer shed 1.8 percent after a second-quarter trading update brought on profit-taking.

Analysts said better-than-expected sales and profit margins were factored into a recent rally in M&S shares, while a downgrade in its cost guidance was not. [ID:nLT484259]

Clothing retail peer Next shed 1.5 percent.

Oil majors were a drag on demand concerns after weak U.S. consumer confidence data on Tuesday although crude prices held above $67 a barrel on the back of a weak dollar.

BP , Royal Dutch Shell , BG Group , and Tullow Oil shed 0.1-0.6 percent.

Thomas Cook was the biggest FTSE 100 faller, down 3.2 percent after the tour operator's fourth-quarter trading update failed to impress. [ID:nLU063347]

Reed Elsevier shed 1.4 percent with Goldman Sachs said to be placing 22 million shares in the publishing group on behalf of an institutional investor, according to traders.

U.S. stock indices looked set to bounce back after falls on Tuesday following disappointing consumer confidence numbers.

Attention this afternoon will be on the final reading for second quarter U.S. GDP, due at 1230 GMT, which was forecast to show the economy shrank at an annualised rate of 1.2 percent.

And U.S. ADP employment figures for September, due at 1215 GMT, were expected to show a drop of 210,000.

Meanwhile, British consumer morale saw its biggest one-month jump since 1995 in September to notch its highest level since January 2008, the GfK/NOP consumer confidence barometer showed on Wednesday. [nLAG003790] (Editing by Dan Lalor