Rio shares fall on rights issue report

SHARES in Rio Tinto fell on Monday after an unconfirmed report said the resources giant had contingency plans to raise up to $US8 billion ($11.2 billion) under a rights issue.

A report in The Sunday Times newspaper in the UK said the plans have been in place since Rio Tinto announce its annual results in February.

Rio Tinto does not plan to raise the funds unless its $US19.5 billion investment deal with China-state owned Chinalco fails.

The newspaper said any rights issue will be underwritten by JP Morgan Cazenove and Credit Suisse.

Rio Tinto shares were down $1.44, or 2.38 per cent, at $58.95 at 1.20pm (AEST).

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