Shares in miner Rio Tinto jumped as much as 11 percent on talk of a $100 billion-plus takeover bid by larger rival BHP Billiton, but the company denied it had been approached.
Amid a flurry of global takeovers, speculation swept the Australian market on Wednesday that BHP (Charts) was readying a hostile bid for Rio Tinto (Charts), traders and analysts said.
Rumor had it the bid came after Rio had rebuffed a friendly offer of A$100-A$110 per share, a premium of up to 23 percent from Tuesday's close, they added.
Rio at first kept mum but after the close of Australian trading doused speculation of a BHP tie-up.
"Rio Tinto is not aware of any takeover approach from BHP Billiton," Rio told the Australian Stock Exchange.
But shares in Rio, which has a market capitalization of about $90 billion at its current price, later traded up 7 percent in London, while mining stocks across Europe rose 2 percent.
The shares had earlier jumped as much as 11.1 percent to a record A$99.69, their biggest daily gain since 1987. They closed 6.5 percent higher at A$95.50 in Australia. Some 8.6 million Rio Tinto shares had changed hands by the close, more than double the monthly average.
"There was screaming everywhere and people were trading like nutters," said Ric Klusman, an institutional dealer at Aequs Securities in Sydney.
BHP rose to a record high of A$32.58, up 4.5 percent before easing to A$31.93 by the close. It traded up 2 percent in London. The cost to insure BHP's dollar debt against default jumped on the report, with its five-year credit default swap spread swelling by 5 basis points to 17 basis points.
Source : money.cnn.com
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