Rio Tinto cautiously optimistic

Rio , the world's No. 3 miner behind BHP and Brazil's Vale , forecast commodity prices will recover but may be volatile as governments rein in stimulus spending.

Investors took Rio's remarks as less cautious than BHP's, and saw Rio's decision to step up capital spending after a hefty pullback last year as a sign of its renewed confidence following last year's debt crisis at the company.

"Rio has also said they plan to spend up to $6 billion (3.8 billion pounds) on capital expenditure in 2010 and that is a good sign, because it suggests they're not tied up for cash and they're seeing opportunities in the market," said Peter Chilton, analyst at Constellation Capital Management, which owns Rio shares.

Rio Tinto shares in London gained 3.84 percent to 3260 pence at 10:50 a.m., outpacing a 3.48 percent gain in the UK mining index. They were the sixth strongest performer in the blue chip FTSE 100 index <.FTSE> last year, surging 175 percent, but have shed 3.5 percent this year.

"A good set of numbers and slightly better versus expectations than the other miners this reporting season," said analyst Tim Huff at RBS said, adding that

Rio resumed paying a dividend for the first time in a year. At 45 cents a share, it was 19 percent lower than last year's final dividend but roughly in line with forecasts.

CEO Tom Albanese said the company had come out of the downturn leaner and fitter, and promised that dividends in 2010 would be at least in line with 2008 before the crisis hit.

BHP also beat forecasts when it posted results on Wednesday, but was more wary about global recovery, holding off from a share buyback.

Rival Anglo American is due to report on February 19.