(Reuters) - Britain's top shares rose on Thursday, with insurers leading a rebound after sharp falls in the previous session, though traders warned the rally, in thin volumes, had the potential to evaporate.

Insurers were led by a 9 percent jump in Old Mutual as news of the planned $3.2 billion sale of its Nordic business cheered investors and analysts who said the deal will help cut Old Mutual's debt and boost shareholder returns.

Old Mutual has been struggling for years to dispose of its non-core assets, the sale of the Nordic business is a step in the right direction and the market likes that, Nick Kunze, head of dealing at BJM Private Clients in Johannesburg, said.

Hargreaves Lansdown, meanwhile, was the biggest blue-chip faller, off 1.3 percent, hurt as Citigroup downgraded its rating for the independent financial advisor to neutral from buy in a review of the UK Diversified Financials.

The UK benchmark was up 25.71 points, or 0.5 percent, at 5,392.51 by 0926 GMT, having sunk 2.3 percent on Wednesday after Italy's borrowing costs rose to a record high, and on revived fears of a possible sovereign credit rating downgrade for France.

Risk-sensitive banks and miners, among the heftiest fallers in the previous session, rebounded, though traders said the gains looked fragile.

I would be very dubious of trusting any rallies at the moment. The market fell through a 50-day moving average yesterday (5,446), and if you look back over the last year, it's fallen averaging 200-300 points every time it's done that, Martin Dobson, head of trading at Westhouse Securities, said.

There's not a lot of volume behind the market -- everyone's potentially looking for safe havens and the dollar and U.S. treasuries are where the money is going at the moment.

His tentative stance was echoed by Lex van Dam, hedge fund manager at Hampstead Capital, which manages $500 million of assets, who urged investors to stay away, saying deleveraging and austerity remain the key words.

Nicolas Suiffet, analyst at Trading Central, said risk for the FTSE 100 remains to the downside, and to expect a decline to Fibonacci levels at 5,350, the 50 percent retracement level from the Nov. 25 to the Dec. 7 up move, and to 5,288, the 61.8 percent level, looking at the technical view on Dec. 2011 futures on an intraday basis.

He added that only a push above 5,435, a former horizontal support which has been broken, would reinstate a positive bias.