LONDON MARKETS: Rio Tinto, Banks Advance As London Bounces Higher

By Steve Goldstein

Rio Tinto shares rallied in London on Friday as the mining giant was able to take a step toward cutting $10 billion of debt by selling potash assets to Brazil's Vale.

Rio Tinto (RTP), which only on Wednesday had admitted that it may need to sell stock, said it will sell potash assets for $1.6 billion to Vale (RIO).

Coming on the heels of Xstrata's $5.9 billion rights offer, Rio said the deal "demonstrates the depth and quality of our asset portfolio and our ability to unlock value for shareholders despite tough credit markets and economic conditions."

Rio Tinto shares climbed 6%, even as many of its mining peers dropped.

Xstrata shares were flat and BHP Billiton dropped 1.5%.

More broadly, the FTSE 100 rose 0.6%, or 42 points, to 4,214.90. Other stocks in Europe advanced, and U.S. stock futures signaled a bit of a comeback after Thursday's steep losses.

The up-and-down banking sector had an up day, with Lloyds Banking Group (LYG) rising over 7%.

AstraZeneca (AZN) wavered between gains and losses after Thursday's 6.3% fall from its flat sales outlook.

Deutsche Bank upgraded the stock to buy from hold, with the broker saying the sell-off was overdone.

Outside the FTSE 100, Henderson Group rallied 12% as it reached a deal to buy rival New Star Asset Management , the debt-laden U.K. fund manager, for 115 million pounds.

"A neat deal by Henderson, it should give them in excess of 50 million pounds of relatively stable revenues and enhance earnings even after the 31 million pounds of restructuring costs," said analysts at Evolution Securities.

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