Newspaper article The Evening Standard (London, England)

Rio Tinto Makes Gains on Talk of Swoop by Big Holder

Newspaper article The Evening Standard (London, England)

Rio Tinto Makes Gains on Talk of Swoop by Big Holder

Article excerpt


RIO TINTO joined other mining shares in making a firm start to the week amid whispers that one of its biggest shareholders may take advantage of the recent collapse in the share price to snap up the rest of the company.

The shares rose 73p to 1580p, but remain well below the record 7078p struck last year after a bid approach from big rival BHP Billiton. It was during this period that state-owned Aluminium Corporation of China (Chinalco) paid more than [pounds sterling]7 billion to acquire a 12%. That is the equivalent of 6000p a share. But Rio has since gone into freefall following BHP Billiton's decision to walk away from making a bid, and the slump in raw-material prices that has reflected a slowdown in China's economy.

Chinalco is estimated to be sitting on a paper loss of [pounds sterling]5.3 billion relating to its initial investment. The speculation intensified after Chinalco reported a 50% drop in profits last year because of low aluminium and copper prices.

Shares were generally marked higher in thin trading. The FTSE 100 index put on 99.4 points to 4246.5. But no one was getting carried away. Wall Street is closed for Martin Luther King Day ahead of tomorrow's inauguration of President-elect Barack Obama.

It was inevitable that early attention would focus on the banks, and Government attempts to launch a second multibillion-pound rescue package designed to free up much-needed funds. The move coincided with pre-exceptional losses of up to [pounds sterling]8 billion being announced by Royal Bank of Scotland, down 8.75p at a record low of 26p.

Meanwhile, the Government increased its stake in RBS from 58% to 70%.

It was the first day of trading for the newly merged HBOS and Lloyds TSB..

Lloyds Banking Group started life at 98.4p and raced up to 101.4p as more than 10 million shares changed hands in a short time. HBOS shareholders received 0.605 of a share in the enlarged company for every share they originally held.

Barclays, which saw a big sell-off in its shares late on Friday, rallied 23.2p to 121.2p. The bank, which has remained outside the "golden circle" of banks that have accepted Treasury funding, says it knows of no reason for Friday's collapse, which saw about a quarter of its stock-market value wiped out. …

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