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Vale (RIO) bidding for Freeport (FCX) is the big rumour down here

Word is zooming around that Vale (RIO) is going to bid for Freeport (FCX) after all. FCX stock suddenly took off at the same time, climbing over 8% in about a nanosecond. The stock then fell back a bit and stands up 5% on the day. To dampen the rumour slightly, it should be noted that volume is not especially heavy in FCX today.

My first reaction is that it's not a very good fit. After being rebuffed by Glencore on its bid for first choice Xstrata, rumours about Freeport being in RIO's line of fire surfaced soon afterwards. But then attention turned to Anglo as the target. Now with this very strong rumour today it seems RIO has been knocked back yet again by Anglo, and may finally be plumping for its third choice.

FCX is heavily reliant on its Grasberg open pit in Indonesia. Copper accounts for 60% of its revenues, with gold accounting for the second biggest chunk.

I hasten to point out that all of the above is based on rumours only. There is no official word from any source right now so be very careful. However, this one has "real deal" feeling, gotta be said. DYODD

Discloure: No position in either of 'em.

UPDATE 1PM: This is the link to a Bloomberg note that has Vale denying the rumours. Note the cute use of semantics by the Vale spokesperson "We are not in talks (obvious...they've talked think FCX materially changes inside a month?) and denies it has made an offer (obvious...we'd know that by now...but what about the near future, dude?). This kind of denial-that-is-not-denial is a clear tactic to stoke up interest in the deal. Makes me want to buy some FCX here.

By the way, the Bloomie note also has some suit from UBS quoted as saying the deal would be "a good fit" for Vale. I'd like to know what he was smoking when he wrote that. If his idea of good fit is "well, they both do metals, dude", then yeah, it's a better fit than RIO buying Hasbro or Bed Bath and Beyond. But apart from that.....good fit? And you might like to know that pumper supreme Jim Cramer has bought FCX today, too.