Xstrata surges on report Vale talks nearing end

By Eleanor Wason and Andrei Khalip

LONDON/RIO DE JANEIRO (Reuters) - Shares in miner Xstrata Plc (XTA.L: Quote, Profile, Research) jumped on Thursday after a newspaper said officials would fly to South America to hammer out a takeover by Brazil's Vale amid talk of a deal with Xstrata's biggest shareholder.

A source familiar with the matter in London said talks were reaching a conclusion, although he declined to say whether they were likely to end with an agreement on the takeover or not.

Traders said Xstrata's top shareholder Glencore had sealed a deal with Vale (VALE5.SA: Quote, Profile, Research) (RIO.N: Quote, Profile, Research), but a source in Brazil close to the talks said negotiations had not been wrapped up.

"As far as I know the negotiations were continuing with everyone sticking to their guns," said the source, who declined to be identified.

Shares in Anglo-Swiss Xstrata closed 1.8 percent higher at 39.21 pounds, defying a 0.8 percent fall in the UK mining index.

An acquisition of Xstrata by Vale -- the world's biggest iron ore producer -- could be worth $90 billion and would mark one of the world's biggest takeovers.

O Estado de S. Paulo newspaper reported that Ivan Glasenberg, head of Swiss commodities trader Glencore, and Xstrata Chief Executive Mick Davis were traveling to Brazil to try to find a solution in a "last-ditch effort".

Vale's chief spokesman declined to comment and said he had no information on any Vale meetings with Glencore, Xstrata's top brass or their agendas.