The race for Falconbridge has narrowed

Inco, also Canadian, said it would concentrate on a merger with US giant Phelps Dodge, as high metal prices continued to fuel bid activity.

Inco's $17.3bn (�9.2bn) bid for Falconbridge ran out of time, with not enough shareholders accepting it.

Xstrata remains favourite to win the mine with a bid that expires in August.

Minerals scrum

Xstrata already owns 20% of Falconbridge and raised its offer for the other 80% last week.

Inco itself is the target of a hostile takeover bid by Vancouver-based Teck Cominco, but wants the union with copper miner Phelps Dodge to proceed in order to create the world's second-largest nickel producer.

Soaring metal prices and better volumes of copper and zinc all saw Falconbridge treble second-quarter profits to $728m from $202m this week.

China's dramatic economic expansion has created a huge appetite for nickel and copper, two minerals that it cannot source in large amounts from domestic mines.

Inco CEO Scott Hand sees a link-up with Phelps Dodge as the route to creating "a global powerhouse in nickel and copper".