May 9 (Bloomberg) -- Australian stocks rose to a record. Rio Tinto Group surged on speculation BHP Billiton Ltd., the world's biggest mining company, made a takeover bid for its smaller rival.
``A takeover by BHP is feasible given that both companies are closely affiliated with Australia, which would make it easier from a regulatory point of view,'' said Michael Birch, who helps manage $133 million at Wallace Funds Management in Sydney, including Rio Tinto and BHP shares.
Rio Tinto, the world's third-largest mining company, said it hasn't received any takeover offer from BHP after the market close.
The S&P/ASX 200 Index climbed 36.60, or 0.6 percent, to 6341.0 at the close in Sydney. It earlier fell as much as 0.3 percent. About 11 stocks rose for every eight that dropped.
Rio Tinto soared A$5.80, or 6.5 percent, to A$95.50, a new record high. It earlier reached a peak of A$99.69. BHP added 75 cents, or 2.4 percent, to A$31.93. Energy Resources of Australia Ltd., a uranium mining company controlled by Rio Tinto, jumped A$1.26, or 5.1 percent, to A$26.20.
Rio jumped ``on talk that BHP have approached them at A$110 and got rejected,'' Marcus Padley, author of trading newsletter Marcus Today, wrote in an emailed report.
``Rio Tinto is not aware of any takeover approach from BHP Billiton Ltd.,'' Stephen Consedine, Rio Tinto's company secretary, said today in a statement in a response to a query from the Australian Stock Exchange.
``We have people looking at a lot of different things,'' BHP's president of carbon steel Chris Lynch said at a conference in Melbourne today when asked about a bid for Rio Tinto. ``We won't comment on specific potential targets,'' he said.
Mining Boom
BHP could afford a $100 billion takeover bid and would be able to pay off the debt in five to six years, Citigroup Inc. analyst Clarke Wilkins said in a May 4 note. The Melbourne-based company could cut $500 million in costs by buying London-based Rio Tinto and combining their Australian iron ore and coal mines.
Zinifex Ltd., the world's third-largest zinc producer, advanced 49 cents, or 2.8 percent, to A$17.88. The company said it won control of Canada's Wolfden Resources Inc. with its C$361 million ($326 million) bid for the exploration company.
A five-year rally in metal prices has sparked 473 deals or bids in the industry this year, valued at $55.4 billion, data compiled by Bloomberg show.
The S&P/ASX 200 Index's futures contract for June rose 0.2 percent to 6336. The broader All Ordinaries Index added 0.6 percent to 6338.0.
The following shares also rose or fell. The stock symbols are in brackets after the company names.
Retail stocks: Woolworths Ltd. paced a gain in retail-related shares after the government's budget announced late yesterday included tax cuts and spending that will pump more than A$67 billion ($55 billion) into the economy.
Woolworths, Australia's biggest retailer, added 79 cents, or 2.9 percent, to A$28.38. Westfield Group, the world's biggest owner of shopping malls, rose 15 cents, or 0.7 percent, to A$22.07. Just Group Ltd., Australia's largest specialty clothing retailer, gained 9 cents, or 2.2 percent, to A$4.26.
Rawson Resources NL (RAW AU), an energy explorer, surged 3.2 cents, or 55 percent, to 9 cents after the company said it entered a joint venture with Texas-based Geochemical Exploration Services Inc. to explore for uranium in North America.
Solco Ltd. (SOO AU), which makes solar water pumping equipment, jumped 1.5 cents, or 11 percent, to 15 cents. The company said the government's plan to spend A$150 million over five years to boost the use of solar power may be a reason for the company's shares' 55 percent surge yesterday.
Source : www.bloomberg.com
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