* Says offer for Xstrata fair to all shareholders
* Says 2012 has started "very strongly" for trading
* Kazzinc completion seen in Q3
* Glencore shares down 1.9 pct, Xstrata down 2.8 pct (Adds analyst comment, updates shares)
LONDON, March 5 (Reuters) - Commodities trader Glencore brushed aside requests from Xstrata investors to improve an agreed $37 billion bid for the miner, saying its existing offer was fair to all shareholders and emphasising its own growth prospects.
Glencore's tie-up with Xstrata, in which it already owns a 34 percent stake, would be the largest deal in the mining sector since Rio Tinto's acquisition of Alcan in 2007, but has faced opposition from some key Xstrata shareholders who say the terms do not recognise the company's potential.
"This is a merger of equals. Xstrata have got most of the senior jobs. Most previous mergers of equals were done at a ratio of equals - this deal ... has been done at a premium," Glencore Chief Executive Ivan Glasenberg, who will become deputy chief executive in the combined group, told Reuters.
"We believe it is a fair deal, fair to all shareholders."
Glencore was addressing investors on Monday for the first time since the long-awaited Xstrata offer was announced in February, and ahead of a campaign of roadshows which will give Glasenberg and other executives the chance to sell the deal.
An ebullient Glasenberg dismissed concerns voiced by Xstrata shareholders, not least over the quality of Glencore's mining asset base which he says has delivered return on equity above rivals, and over the combined entity's management structure, which some see as leaving room for potentially damaging clashes.
Glasenberg, the single largest Glencore shareholder, will become deputy CEO, reporting to fellow South African Mick Davis, whom he picked to run Xstrata 11 years ago and with whom he has a close but sometimes tense relationship.
"Mick has certain strengths, I have certain strengths. I will be focusing more on the trading side of the business, on relationships ... Mick (will) focus on the production base, investor relations," he said. "It is a perfect combination."
Glasenberg said there would be similar benefits further down the chain and again dismissed worries over an exit of Glencore's star traders, whom he said would instead be keen to take advantage of increased opportunities within a larger group, even after lock-up clauses dating from its IPO expire in May.
The world's largest diversified commodities trader is offering 2.8 new shares per Xstrata share it does not already own. The offer is currently worth just under 1,154 pence per share, compared to an Xstrata share price of around 1,164 pence.
Glencore shares were down 1.9 percent at 412 pence at 1220 GMT, while Xstrata's were 2.8 percent lower, just below the UK sector down 2.3 percent.
Analysts said Glencore's comments were as expected, as it stuck to its position with a shareholder vote still months away, but could dampen some of the more bullish hopes of a sweetener.
"Clearly Glencore is doing its best to sell its underlying business, highlighting the growth in copper and coal assets...that is part of the firepower the company will use to argue why the current offer of 2.8 is a reasonable offer," analyst Charles Cooper at Oriel said.
"But we recognise many of Xstrata's operations have good growth too, and most of its assets are in OECD countries."
Glencore confirmed on Monday full-year numbers given as estimates at the time of the merger announcement, including a 7 percent rise in net income to $4.06 billion and a trading profit dented by cotton losses and lower volumes in some metals.
Operating profit in its industrial division - which includes its producing assets from mines to oil wells - rose 18 percent, and Glasenberg said Glencore would focus in conversations with investors on its long-life, low cost assets. Low-capital intensive growth has become a relative rarity among miners as costs at major projects escalate
"We don't build mines for the sake of building mines. In Glencore we own a big portion of this equity - we are more focused on return on equity-type assets," he said.
Glasenberg said its trading division provided a wealth of potential deals and growth.
"We deal with 7,200 suppliers, we see opportunities before anyone else does," he said. "The Xstrata shareholders are going to tap into this mass of information, knowledge."
Glencore's trading arm saw an 18 percent drop in operating profit in 2011, largely because of cotton losses where Glencore was hit by fixed price contracts and a rollercoaster market.
Glasenberg said 2012 had started "very strongly" for the division across all commodities as the physical movement of commodities increased, adding its key growth area of iron ore was looking "a lot stronger" in 2012.
Glencore traded just 10.3 million tonnes of iron ore in 2011 - less than 1 percent of the seaborne market - but the steelmaking ingredient has been pinpointed as a key area of potential growth for the combined Glencore-Xstrata. Some analysts and industry watchers, though, fret it may be too late for the group to break into a heavily concentrated business.
"We are not going to go into iron assets for the sake of growing iron ore production. It is going to be opportunistic," Glasenberg said, pointing to potential options in West Africa.
"When I was in coal, people told me it was too late to develop the coal business ... there are always opportunities, you just have to find them."
Glencore increased mineral reserves at its Kazakh Kazzinc operation, with three deposits showing a 50 percent increase in contained gold and 136 percent increase in contained copper, and said it expected to complete plans to raise its stake in the unit to 93 percent in the third quarter.
It will pay a total dividend for the year of $0.15 per share, netting Glasenberg just under $164 million. (Editing by Sophie Walker and Mark Potter)