Brazil's Vale says Xstrata talks fail

SAO PAULO (Reuters) - Vale (VALE5.SA) RIO.N, the world's largest iron ore miner, said on Tuesday that talks aimed at buying Swiss rival Xstrata had failed and that Vale would look at other potential takeover targets.

"Given that an agreement was not reached, discussions between the parties have been discontinued," Vale said in a statement to the local market regulator. Vale said it reserved the right to make a new offer for Xstrata if circumstances changed.

No one at Xstrata was available to comment.

Earlier on Tuesday, Vale's chief executive said acquiring Xstrata (XTA.L) was not a priority.

"It's a difficult operation. It's not simple, and there are issues involving marketing rights that we're discussing. But it's not something that's a priority for Vale," CEO Roger Agnelli told reporters in Sao Paulo.

The negotiations, which had gone on for months, were bogged down over price and marketing rights.

Xstrata's key shareholder is commodities trading house Glencore.

Asked earlier on Tuesday if talks had progressed, Agnelli said, "We're at the stage that we've always been in. We're flirting, and it takes a while before that becomes marriage."

"We're ready to make the acquisition, but we're not going to sacrifice what is fundamental for us, which is generating value for our shareholders."