Vale seen unveiling agreed Xstrata deal this week

LONDON (Reuters) - Brazilian mining firm Vale (VALE5.SA) RIO.N, the world's largest iron ore producer, is days away from unveiling an agreed takeover bid for Swiss-based rival Xstrata (XTA.L) worth over $80 billion (40.4 billion pounds), a newspaper said on Sunday.

The Observer said in an unsourced report a deal could be announced as soon as this week and Vale that was expected to provide about half the capital in cash and the remainder in a preference share issue.

In a separate report, the Sunday Times said Vale had lined up a $50 billion financing package from a group of global banks after its finance chief Fabio Barbosa met up to 12 banks last week in London.

HSBC is leading a consortium thought to include Santander, BNP Paribas, Lehman Brothers, Credit Suisse and Citigroup, the report said.

Vale said last week it was in talks with Xstrata about a takeover but cautioned that current market turbulence in global financial markets posed a significant hurdle.

Xstrata and Vale were not immediately available for comment.

(Reporting by Miyoung Kim; Editing by Quentin Bryar)