* Sweden's Hanson leads by one after third round

* Flawless Mickelson storms home on back nine

* McIlroy and Woods fall flat

(Adds Mickelson, McIlroy quotes)

AUGUSTA, Georgia, April 7 (Reuters) - Phil Mickelson stormed

up the Masters leaderboard on Saturday to finish within a shot

of surprise third round leader Peter Hanson and restore some

sense of normality to the first major of the year.

Mickelson produced a dazzling display of shot-making and

nerveless putting in a flawless six-under-par 66 on a day when

Rory McIlroy relived his worst nightmare and Tiger Woods faded

out of contention.

The left-hander, already a three-time Masters champion,

entered the clubhouse at eight-under for the tournament and

breathing down the neck of Hanson, who birdied the last two

holes for a 65, the best round of the tournament.

"I love it here and I love nothing more than being in the

last group on Sunday at the Masters. It's the greatest thing in

professional golf," said Mickelson.

South Africa's Louis Oosthuizen, the runaway winner of the

2010 British Open, put himself in the frame for a second major

with a 69 to be third at seven-under while American Bubba Watson

was a further shot back after a 70.

Saturday is traditionally known as 'Moving Day' and, more

than any other tournament, the intense pressure of the Masters

brings out the best and worst in every golfer.

While the leaders were thriving in the pressure-cooker

atmosphere, McIlroy and Woods both walked off the 18th dejected

and frustrated.

McIlroy began the day in a tie for third but for the second

consecutive year at Augusta National the Northern Irishman's

game collapsed and he tumbled down the leaderboard.

Eight different players, including Lee Westwood, Matt Kuchar

and Henrik Stenson, had a share of the lead at various stages

during the round, but McIlroy was never in the hunt.

After starting the day one shot behind overnight leaders

Fred Couples and Jason Dufner, McIlroy shot a five-over-par 77,

that included two double-bogeys, to end at one over.

He took 42 shots for the front nine, rekindling memories of

last year when he held a four-shot lead at the start of the

final day but closed with an 80.

"Seems like every year I come here I throw a bad nine holes

out there," McIlroy said.

"I think if I can finish top 10 it would be a really good

result. So if I can go out there tomorrow and shoot something in

the mid 60s and walk away from here with a top 10, I'd be very

pleased."

WORST FINISH

A frustrated Woods failed to make up any ground on the

leaders and was in danger of his worst finish at the Masters

since he turned professional.

Needing to shoot a low score to get back into contention,

the four-times champion could only manage an even-par 72 to

remain at three over.

He made a bright start, with birdies at the third and fourth

holes, as the crowd let out a mighty roar that echoed through

the pine trees but failed to make another birdie all day as his

emotions started to boil over.

On the 13th tee, he slammed his club into the ground after

hooking his drive into the banks of Rae's Creek. On the previous

day, he kicked one of his irons after missing a green, but said

he was sorry for his petulant behaviour.

"Certainly I'm frustrated at times and I apologise if I

offended anybody by that," Woods said.

Defending champion Charl Schwartzel also ended his chance of

winning another green jacket after the South African shot a 75

to end the day at six over while England's world number one Luke

Donald was a further shot back after also signing for a 75.

Mickelson started the day at two-under. He parred the first

nine holes before making his move on the back nine, which he

covered in just 30 shots, featuring four birdies and an eagle.

Hanson bogeyed the opening hole but did not make another

mistake all day, reeling off eight birdies to lead a major for

the first time.

"It's a new situation to me. I've been up on the leaderboard

a few times, but I've never led in anything like this," said the

Swede.

"I know it's going to be a tough night ... I probably won't

be watching a lot of Golf Channel."

(Editing by Frank Pingue/Peter Rutherford)