Rio Tinto's hefty $38bn agreed bid for Canadian aluminium business Alcan set light to the mining sector today.
Rio itself fell 75p to £39.18 as it topped a $28.8bn offer for Alcan from rival Alcoa, while other miners moved higher as analysts speculated on the next bid target.
BHP Billition added 16p to £15.10. Some traders believed BHP — which was also said to be interested in Alcan — could now move for Alcoa instead.
"Alcoa, with a question mark placed over its expansion plans, may now become a target for BHP," said Graham Neale of Killik & Co. "With the exception of Rio, the mining sector is pushing ahead on the renewed consolidation momentum, with Lonmin and Vedanta Resources [among] the leading risers."
Evolutions Securities said: "We are raising our target prices on the large cap miners to reflect a higher bid premium prompted by Rio Tinto's offer for Alcan. We have ascribed approximately a 20% additional bid premium. We believe [Rio] could still remain vulnerable to, for example, private equity or Chinese buyers, even if it is successful with Alcan."
Vedanta rose 66p to £17.57, while Lonmin was 92p better at £42.92. Antofagasta added 16.5p to 689p and Xstrata climbed 77p to £33.51.
The strength in the miners meant leading shares were on the way up today. By lunchtime the FTSE 100 was 14.1 points better at 6629.2, helped by an overnight rise on Wall Street.