Yesterday's trading: Has Rio's deal come too late?

Rio Tinto was praised last week for the audacity of £19bn swoop for Canada's Alcan. Now it's time for the backlash. The miner came under fire amid accusations it's climbing aboard the metals mergers bandwagon too late in the day. Analysts at Citigroup question why Rio is buying now when it could have done the same deal two years ago at half the price. A fair question - though you might say the same about any number of metal deals recently. > SHARE TIPS: Rio Tinto More substantively, Citigroup analyst Heath Jansen calculates the Alcan takeover will only improve Rio's per-share earnings by 1% next year, whereas a buyback could have added a whopping 70%. The acquisition will require heady aluminium prices for at least the next four years to add up, he said, downgrading to a hold from buy. Rio shares slipped back 13p to 3717p. The gloomy note added to the clouds that are suddenly hanging over the high-flying metals sector. A dreary trading update from Lonmin (down 293p to 3985p) cast a pall over the FTSE 100, pulling the index down 19 to 6697.7. Meanwhile speculation that BHP Billiton could also wade into the aluminium fray with a £25bn offer for Alcoa left its shares nursing an 18p loss to 1509p. Also weighing on metals was a slide in the copper price, which hit shares of Xstrata, down 61p to 3361p. Even an upbeat trading statement from Russian gold miner Peter Hambro failed to galvanise its shares, which slid 8p to 985p. Away from the dirty diggers there were some splashes of light on the stock exchange. Among them was pharma giant GlaxoSmithKline, which benefited from an upgrade from JP Morgan. The brokerage claims there's upside in the stock even after stripping troubled diabetes drug Avandia from earnings forecasts. Glaxo's pharma business now accounts for just 56% of the company's value, with vaccines equating to a healthy 29% and consumer products 15%. Vodafone regained some lost ground after being shaken up early in the session by a report that it's considering an £80bn bid for US telecoms giant Verizon. The firm denied it has any such plans, leaving the stock down 1p to 162.2p. Rolls-Royce shares dropped 5½p to 564½p. The aero-engine has been on an upward trajectory for the past three months, rising 14% as it unveiled a series of big ticket orders and posted a new record for sales at the recent Paris Airshow. But brokers ABN Amro rocked Rolls by claiming it faces stiff headwinds - not least the weakening dollar. The broker cut its recommendation to hold from buy, although it also took the opportunity to raise its valuation to a more realistic 615p a share from a behind-thecurve 550p. Morgan Stanley joined in, advising punters to take profits. Gas Turbine Efficiency has an interesting story to tell. It has perfected a high pressure hose that cleans jet engines. With the world's major airlines in a rush to demonstrate their green credentials, the firm has seen a 300% spike in sales to £4.6m in the first half. The shares couldn't quite ape that impressive gain, but they closed 3p, or nearly 6% higher at 56½p.