BHP Billiton shares up on fresh China stake talk

SYDNEY (Reuters) - Shares in BHP Billiton Ltd/Plc (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research), the world's No. 1 miner, rose as much as 4.2 percent on Friday to a record high, buoyed by fresh speculation Chinese interests were looking to build a stake in the group.

The Australian newspaper reported that Chinese interests have approached a major Australian superannuation and investment fund to be a partner in a multi-billion-dollar swoop on 9 percent of BHP Billiton.

Under the terms of the proposed deal, the Chinese would take 4.5 percent of BHP Billiton, while the other half would be split between the Australian fund and a global private equity investor, the paper said on its Web site, without citing sources.

The report, which did not name the Chinese entities or the fund, follows persistent market speculation that Chinese firms were looking to build stakes in BHP.

Earlier this week BHP shares hit a record on market talk giant Chinese aluminum maker Chinalco, already the largest shareholder in Rio Tinto Ltd/Plc (RIO.AX: Quote, Profile, Research) (RIO.L: Quote, Profile, Research) which BHP is seeking to acquire in a hostile all-share offer, was a buyer of BHP shares.

China is a key player behind the huge profits that BHP and smaller rivals are generating as its booming economy gobbles up raw materials from iron ore to oil.

Chinese companies have stepped up investment in Australian miners as they search for stable supplies of iron ore, coal, nickel and other industrial staples in short supply at home.

The country sees its modern-day industrial revolution lasting decades, prompting it to take a longer view of metals prices and to spend sooner rather than later on securing steady supplies, according to analysts.

By 0021 GMT (8:21 p.m. EDT), BHP shares were up 3.7 percent at A$49.75, off an early record peak at A$49.98. Rio shares were up 2.5 percent at A$156.30.

(Reporting by Jonathan Standing)