Rio Tinto rights get strong demand

Rio revealed on Thursday that shareholders had stumped up for almost all its London shares on offer. The UK tranche would have raised about 7.1 billion pounds, more than a fifth of the market value of the UK-listed company.

Results from the Australian offer were still to be released.

Strong take-up of the rights offer would place Rio in a much stronger position, though the mining group will still need to sell off non-core assets, analysts said.

"The high take-up reflects that the offer was attractively priced," said Ross Barker, managing director of Australian Foundation Investment Co, which manages about A$3.5 billion including Rio shares.

"It also confirms our view that shareholders were wanting to participate in Rio's recapitalisation to get through with the issues that it had with the Alcan purchase."

Barker's fund was among those shareholders who agitated earlier this year against a planned $19.5 billion tie-up with China's state-owned Chinalco.

Chinalco, Rio's top shareholder, took up its full entitlement in a sign it is far from severing ties with Rio .

Relations between Rio and the Chinese group soured last month after the miner called off a bigger equity partnership and opted instead for the rights issue and an iron ore joint venture with rival BHP Billiton, prompting China's state media to brand Rio as a "dishonourable woman."

Chinalco owns about 9 percent of the combined Rio Tinto group and would have spent $1.5 billion to take up all its rights -- trimming its average holding cost in Rio to around 44 pounds a share. Chinalco bought its initial stake at 60 pounds in February 2008, near the top of the market.