Rio buyback fuels WMC gossip

RIO Tinto, the world's second-largest miner, today announced a bigger-than-expected A$1bn (£408m) buyback of its shares at a hefty discount.

The move has reignited speculation that it may still throw its hat in the ring with a counter-bid for Australian uranium and nickel producer WMC Resources.

Analysts say the buyback at a 15.6% discount to Friday's close leaves Rio well armed to include its scrip in any rival bid to BHP Billiton's 'friendly' A$9.2bn offer for WMC. Rio previously said it planned to buy back about A$400m-A$500m of its shares as part of a $1.5bn capital management programme.

Rio Tinto finance director Guy Elliott did little to dampen speculation about a tilt at WMC, saying the company retained 'the flexibility to both complete this programme and to pursue other opportunities'.

Though endorsed by WMC, BHP Billiton's offer has so far won only a small fraction of acceptances.