Britain's FTSE rebounds on deal-making prospects

* FTSE 100 up 0.8 pct

* Credit Suisse (NYSE: CS - news) downgrades UK equities

* RSA jumps on bid interest

* Royal Mail (LSE: RMG.L - news) falls after Ofcom probe (Adds C.Suisse downgrade, UK GDP, updates prices)

By Liisa Tuhkanen and Lionel Laurent

LONDON, July 28 (Reuters) - Britain's top share index snapped a five-day losing streak on Tuesday, with hopes for corporate deal-making and robust corporate results offsetting market turmoil in China and worries about emerging-market growth.

RSA Insurance (LSE: RSA.L - news) soared 14 percent on news Zurich Insurance was weighing a takeover bid. Hikma Pharmaceuticals was also up, more than 7 percent, after announcing a deal to buy Boehringer Ingelheim's U.S. generic drugs business for about $2.65 billion in cash and stock.

The UK market's skew towards energy and mining shares - vulnerable to a slowdown in China demand - has led it to underperform broader Europe in recent weeks. On Tuesday that underperformance continued with the blue-chip UK FTSE 100 rebounding less strongly than peers.

The blue-chip FTSE 100 index was up 0.8 percent at 6,555.69 points by 1218 GMT, while the pan-European FTSEurofirst 300 index was up 1.2 percent. The FTSE hit a record 7,122.74 points in April but is now more than 8 percent below that high and down 0.5 percent in the year to date.

Investment bank Credit Suisse warned on Tuesday it was time to downgrade UK shares, with interest rates set to rise and commodity prices set to weigh on the FTSE. A rising currency was also a negative for company earnings power, it said.

"The UK market ends up marginally underperforming global markets when UK interest rates initially rise," Credit Suisse strategists wrote in a note to clients, adding that UK market valuations were also above their long-term average.

British economic growth got back on track in the second quarter of 2015, data showed. Economists expect a minority of policymakers to vote to raise interest rates as soon as next week's Bank of England meeting, amid signs of strengthening wage growth and an economy operating at close to full capacity.

In other top gainers, GKN (LSE: GKN.L - news) added more than 6 percent after the British engineering company said it had agreed to acquire Netherlands-based Fokker Technologies for 706 million euros ($781 million), including debt, to strengthen its position as a supplier to aeroplane manufacturers.

On the downside, Royal Mail fell 3 percent after Britain's postal regulator Ofcom said Royal Mail had breached competition law by proposing wholesale prices that were designed to be more expensive for any firm looking to run a rival mail delivery service. (Reporting by Liisa Tuhkanen; Editing by Mark Heinrich and Susan Thomas)