Shire and energy firms lift FTSE but RSA tumbles as Zurich drops bid

* Blue-chip FTSE 100 index up 0.5 pct

* RSA Insurance falls 20 pct

* Shire gains after European drug approval (Adds details and quote, updates prices)

By Kit Rees and Atul Prakash

LONDON, Sept 21 (Reuters) - Britain's blue-chip share index edged higher on Monday, with drugmaker Shire gaining after receiving European approval for an ADHD treatment, while energy firms tracked a rally in crude oil prices.

RSA Insurance, however, plunged 20.4 percent after Zurich Insurance Group abandoned its proposed 5.6 billion-pound ($8.7 billion) bid for the British insurer.

"What you are likely to see is consolidation in the sector," said Matthew Brennan, analyst at Brown Shipley. "If RSA isn't involved in that then obviously you could see margins squeezed."

The blue-chip FTSE 100 index was up 0.5 percent at 6,134.61 points at 1031 GMT after falling in the previous two sessions.

The UK Oil and Gas index rose 0.3 percent, helped by a 1.2 percent rise in oil prices as U.S. drilling slowed and there were concerns about planned American production at low prices.

"Energy companies are getting a lift from a bounce in oil prices, but the market really needs a catalyst to come out of the recent trading range. Any improvement in China manufacturing data due later this week could help the market," IG analyst Chris Beauchamp said.

Shire rose 2.3 percent, the top gainer in the benchmark FTSE 100 index, after it received European approval for its Intuniv tablets as a non-stimulant treatment for attention deficit hyperactivity disorder, or ADHD, in children and adolescents.

"Traders obviously hope new indication for Intuniv can help replace some of the lost sales since the drug went off-patent and began suffering generic competition," said Mike van Dulken, head of research at Accendo Markets.

"Continued progress by Shire in ADHD keeps it ahead of game to develop the next preferred treatment, to help it recapture lost market share to what is inevitable generic competition over time."

Inmarsat shares rose almost 2 percent after the company announced its aviation broadband initiatives to offer in-flight high-speed internet access to passengers with Deutsche Telekom and Lufthansa. (Reporting by Atul Prakash; Editing by Andrew Roche)