Rio Tinto takes biggest tumble since 1987 crash

SYDNEY (Reuters) - Shares in global miner Rio Tinto (RIO.AX) suffered their heaviest fall since the 1987 stock-market crash on Thursday, after it dismissed rumours it was warming to a $62 billion (38 billion pound) takeover by rival BHP Billiton BHP.AX <BLT.L.

Rio Tinto shares, which jumped sharply the day before on the flurry of rumours, fell 16.3 percent to a low of A$65.60 after it told the market late on Wednesday that it knew of no basis for the speculation over BHP's all-share bid.

"It's just the unwind of the rumour-induced spike from yesterday," said Don Williams, chief investment officer at Platypus Asset Management.

The rumours ranged from a sweetened cash bid by BHP Billiton and a Chinese counter-bid and also included talk that Rio was finally opening the door to takeover talks with BHP.

Thursday's historic fall in Rio's Australian stock eclipsed the 6 percent lost by its London-listed shares on Wednesday.

Bloomberg news, citing two unnamed sources, reported from Europe in story dated Thursday that EU regulators had told BHP that its bid may break anti-monopoly rules.

A BHP spokesman declined to comment directly on the report, but said BHP continued to cooperate with the commission, which is scheduled to release its findings by January 15, 2009.

A source familiar with the probe said the commission had yet to compile a final list of any objections to the offer.

"Rio said they're not in talks with anybody, there's nothing behind what people were speculating on..." said Albert Hung, chief investment officer at Alleron Investment Management.