Mining firm Xstrata's shares hit record peaks on Monday amid speculation it could launch a takeover for nickel and zinc producer Falconbridge. It followed news that Teck Cominco of Canada, the world's biggest zinc miner, had agreed to buy rival Inco for 17.8bn Canadian dollars ($16bn; �8.6bn).
The bid is conditional on Inco dropping its move for Falconbridge - long thought to be an Xstrata target.
One dealer said the purchase of Falconbridge would "transform" Xstrata.
"It removes the risk of them being outbid, or at least diminishes it massively," the dealer told Reuters.
Switzerland-based Xstrata already owns almost a fifth of Falconbridge after buying a 19.9% stake in the firm for C$2bn in August last year.
Shares in Switzerland-based Xstrata, which is listed on the FTSE 100, peaked at 2431p on Monday - a rise of almost 8%.
Its shares later closed 111p, or 4.92%, higher at 2365p.
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