Xstrata, the world's sixth-biggest mining company, is open to talks with potential suitors, including Vale and Anglo American, the Financial Times said on Tuesday.
Xstrata shares topped the gainers list on the FTSE 100, surging 3.45 percent to 37.82 pence compared to a flat UK mining index. Anglo American edged up 0.15 percent at 3,400 pence.
The newspaper, citing people close to the situation, said Xstrata Chief Executive Mick Davis had asked the firm's advisers, Deutsche Bank and JP Morgan Cazenove, to take seriously any interested parties.
"We're not commenting on any of this speculation," Xstrata spokeswoman Claire Divver said.
The FT said Davis' stance had prompted Vale, the Brazilian miner formerly known as CVRD, to hire Lehman Brothers and Merrill Lynch to consider the merits of a potential bid.
A Vale company spokesman in Brazil declined to comment on Monday on weekend newspaper reports about a possible bid for Xstrata.
A company source, however, said the firm was unlikely to make such a bid in the near term since it was busy absorbing its $17 billion takeover of Canada's Inco and working on a range of costly projects.
The Financial Times said Davis also recently met Anglo Chief Executive Cynthia Carroll at the London headquarters of UBS, Anglo's adviser, though it added that no serious proposal was discussed.
Anglo declined to comment. "It's somewhat silly season at the moment in terms of the amount of speculation, but we're not going to give any comment whatsoever about our executives' diaries," spokesman James Wyatt-Tilby said.
Xstrata held an investor conference last week, highlighting its growth prospects in copper, coal and nickel.
At the conference Davis said BHP Billiton's move to acquire rival Rio Tinto was likely to lead to another wave of mergers in the sector.
"Whether that transaction goes through or not, time will tell. It certainly, I think, has created another new dynamic and momentum for consolidation in the industry," he said.
"I think we are the most perfectly positioned company in the industry, the company which is going to benefit from consolidation in any way that it actually transpires."