Shares in Rio Tinto raced nearly 7 per cent today as rumours of a near $100 billion (£50 billion) takeover bid by BHP Billiton, its larger rival, lit up trading screens around the world.

Despite a statement from Rio Tinto insisting that it had not received an approach, speculation that it had rebuffed an offer from BHP Billiton for A$100 to A£110 a share sent dealers into a frenzy.

Rio Tinto surged 223p to £35.28 in early trading, boosting its market value by more than £2.2 billion. The shares later settled to be just over 5 per cent better at £34.74.

The group’s shares in Australia had closed 11 per cent higher for its biggest one-day gain since 1987.

Ric Klusman, an institutional dealer at Aequs Securities in Sydney, told Reuters: “There was screaming everywhere and people were trading like nutters.”

Rumours of a possible bid for Rio Tinto have been mounting since Monday, when Citigroup said that the group would make an attractive bid target for private equity firms given its strong cash flow.

It added that BHP Billiton would be a more likely bidder, given potential synergies between the two firms in iron ore and copper.

A takeover would be the crowning glory of an unprecendented wave of consolidation in the present commodity boom.

Earlier this week, Alcoa launched a $27 billion takeover bid for its aluminium rival Alcan.

BHP Billiton bought WMC Resources two years ago while Norilsk, of Russia, has mounted a $4.8 billion counterbid for LionOre, a target of Xstrata. Xstrata is considering whether to up its own offer.

BHP Billiton refused to comment today but sources close to the company signalled that the group was in the middle of a $10 billion share buyback programme, which would have to be stopped for a bid to be tabled.

BHP Billiton was created through a mega-merger between Broken Hill Pty, of Australia, and Billiton, of South Africa, in 2001.

A marriage with Rio Tinto would create a force accounting for 6.6 per cent of world primary aluminium production, producing enough iron ore to rival the world’s largest producer, CVRD, of Brazil.

The combined business would also challenge Codelco, of Chile, in the copper market.

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