UPDATE 2-Rio wraps up rights issue, Australian demand strong

* Australian shareholders take up 95 pct of entitlements * Australian rump sold at A$48.50 per share * Underwriters book handsome fees (Adds sale of Australian rump, London shares) SYDNEY, July 3 (Reuters) - Global miner Rio Tinto (RIO.AX) (RIO.L) wrapped up one of the world's biggest rights issues on Friday, saying Australian shareholders had taken up 95 percent of their entitlements to the new shares. On Thursday, British shareholders had taken up 97 percent of the deeply-discounted, fully-underwitten $15.2 billion rights offer, the fifth-biggest on record, putting the indebted Anglo-Australian group on a firmer financial footing. The issue was a bonanza for its underwriters: Credit Suisse (CSGN.VX), J.P. Morgan Cazenove (JPM.N), Macquarie (MQG.AX), Deutsche Bank (DBKGn.DE), Morgan Stanley (MS.N), RBS (RBS.L) and Societe Generale (SOGN.PA). The underwriters of the two legs of the rights issue were paid a 2.75 percent fee, or around $420 million in total. In Australia, banks sold the "rump" at A$48.50, 71 percent higher than the rights issue price of A$28.29, and in London the remaining shares sold on Thursday at 2,100 pence, 50 percent higher than the rights issue price of 1,400 pence. Rio shares fell 4.2 percent in Sydney to close at A$49.60 and the London shares were down 2.9 percent at 1,975 pence by 0920 GMT, compared to a 1.8 percent decline in the mining index .FTNMX1770. Rio needed to raise the money to cut a $38 billion debt mountain it accumulated when it bought Canadian aluminium group Alcan at the top of the commodities market in 2007, an acquisition that opened one of the 136-year-old firm's darkest chapters. Rio Tinto fell prey to an aborted takeover bid by rival BHP Billiton (BHP.AX) (BLT.L) then briefly fell into the arms of its major shareholder, Chinese state-owned aluminium group Chinalco, before finally calling off the $19.5 billion Chinalco deal. In the end, encouraged by a share-market rally and its investment banks, Rio Tinto opted for the rights issue and a cost-cutting iron ore joint venture with BHP Billiton. But analysts said the mining giant still needs to sell non-core assets to pay down more debt.