HONG KONG -- Shares of Rio Tinto and BHP Billiton were up sharply in Sydney trading Monday amid speculation that the mining groups could be preparing separate bids for Canadian aluminum maker Alcan Inc.
The Sydney Morning Herald and the Age reported Monday that Rio Tinto , the world's No. 3 miner by sales, hired Deutsche Bank AG to advise it on a possible takeover bid for Alcan.
A Rio Tinto spokesman declined to comment on the issue.
Last week, Canada's Globe and Mail reported that BHP had initiated talks with Alcan. The bid is believed to be still in the early stages, or roughly on par with other companies that have made preliminary expressions of interest in the aluminum giant, the Sydney Morning Herald report said
Shares of Rio Tinto were up 1.6% to A$94.18 (US$77.15) in late trading after earlier touching A$95.39.
Shares of BHP Billiton rose 1.6% to A$31.16, easing from its session high of A$31.29.
BHP Billiton and Rio Tinto aren't "trading at particularly high price-to-earnings multiples despite these big rises in commodity prices," said Stephen Roberts, chief economist of Grange Securities in Sydney.
"There is a lot of cash floating around looking for attractive prospects, and because of the underlying fundamentals, the big resources stocks are starting to look attractive."
Sydney's benchmark S&P/ASX 200 was down 0.2% at 6,239.60.
Last week Alcan rejected a $27 billion hostile bid by U.S. aluminum producer Alcoa which would have created the world's biggest aluminum company.
Alcan said it is continuing discussions with other potential bidders.
In addition to bids by Rio Tinto and BHP Billiton, Australian media reports said other potential suitors for Alcan also include Co. Vale do Rio Doce , Anglo American , Xstrata Plc , and Rusal. The report also said Chinese companies and private-equity groups could emerge as potential bidders.
Chris Oliver is MarketWatch's Asia bureau chief, based in Hong Kong.
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