Rather than making up some of the 9% of its share price shed yesterday, Rio was again unpopular with investors, dropping a further 4% or $2.01 to $45.49.
Its shares spiked early at $47.71 but then steadily declined over the course of the day.
Deutsche Bank retains a buy rating for Rio with a $67.60 price target and supports the appointment of Jan du Plessis as chairman.
Meanwhile, Southern Cross Equities director Charlie Aitken told Dow Jones Newswires there is a very real possibility that the Foreign Investment Review Board may squash Rio’s proposed deal with Chinalco, forcing the major into a diluted rights issue.
Aitken said this would open the door for BHP Billiton to make another offer for Rio after November.
“It would be extremely ironic if it turned out all of Rio's efforts to avoid BHP's clutches ended up in BHP getting Rio at a significant discount to their original proposal.”
BHP Billiton was 0.55% or 17c up to $31.25.
However, the clear standouts of the day were gold stocks with some positive news emerging and gold edging up again.
Spot gold dipped as low as $US883 an ounce overnight, before sharply rising to $944.45/oz.
At 4pm EDT, spot gold was trading at $927/oz.
Newcrest Mining rose 5.5% or $1.72 to $33.09, Lihir Gold also gained 5.5% or 17c to $3.26 and Sino Gold Mining jumped 7% or 22c to $3.50.
West African-focused gold plays had a good day, with Perseus Mining boosted by 6% or 4c to 69c after a resource upgrade, while Mineral Deposits rose nearly 5% or 3c to 68c on news of its first gold pour.
Remarkably, Athena Resources’ share price jumped 124% or 3.6c to 6.5c on the minor news that it had applied for an exploration licence covering a Western Australian area prospective for gold.
Wall Street’s Dow Jones gained 1.2% overnight and the S&P-ASX 200 had a similar performance, rising 1% or 33.9 points to 3480.2 points.
Whitehaven Coal shares jumped 6% or 9.5c to $1.60 on news of FIRB approval of its proposed marriage to Gloucester Coal.
Meanwhile, shares in Gloucester Coal rose 5c to $4.81.
