SYDNEY/LONDON (Reuters) — Anglo-Australian miner Rio Tinto Ltd/Plc signed a $38.1 billion cash deal to buy Canada's Alcan Inc., creating the world's biggest aluminium producer, the companies said yesterday, trumping a hostile offer from Alcoa Inc.Rio, the world's second-biggest miner, said it would pay $101 a share, 13 percent above Alcan's closing price in New York on Wednesday and 33 percent above a rival bid from US group Alcoa.

Alcoa had offered $28.8 billion in cash and stock for Alcan.

Rio said the deal would help it diversify beyond its strength in iron ore and copper, as well as boost its position in fast-growing aluminium markets.

The mining industry is benefiting from soaring metals prices, and established players are seeking deals to fight rising competition from emerging markets.

"There is a lot of cash in the market and a lot of cash being generated in the mining sector generally, so you'll continue to see M&A across the board," said Greg Goodsell, equity strategist at ABN AMRO.

One analyst said the Rio offer for Alcan — which tops Alcoa's bid by about $24 per share — leaves Alcoa's strategy in question.

"It's a big improvement on the Alcoa offer," said Charles Stanley analyst Tom Gidley-Kitchin. "It puts Alcoa strategy in question (and) makes them vulnerable to a BHP Billiton offer."

Analysts in the past have speculated that Alcoa is a takeover target, in part because of its hostile offer for Alcan. Alcoa shares were up 7 percent at $45.40 on the New York Stock Exchange and soared as high as $46.15, an all-time high.

Alcoa was not immediately available for comment.

The possibility of a rival bid for Alcan had been high since Alcoa launched its hostile offer at the beginning of May. Alcan rejected the Alcoa bid many times, calling it inadequate.

The move opened the door to other bidders, and large mining companies began circling Alcan, which has long been viewed as an attractive target because of its low power costs and efficient smelters. Alcan said yesterday that it had been involved in "multiple major discussions".

Brazil's Companhia Vale do Rio Doce (CVRD) also put in an offer for Alcan, according to sources familiar with the situation.

CVRD said in a statement that it was not ruling out a bid for Alcan in the future but said it was not currently in talks with the company.

Rio shares in London were down 3.3 percent at 3,860 pence, while Alcan shares rose nearly 11 percent to $99.34 on the New York Stock Exchange.

The combined Rio-Alcan group will have the capability to make 4.4 million tonnes of aluminium a year, making it the world's biggest producer ahead of the current leader, Russia's UC RUSAL. Aluminium is used in products from drinks cans to aeroplanes.

"The demand outlook (for aluminium) for the next 10 years is quite positive, with expected world demand growth to 2011 of over 6 percent and demand growth in China alone of over 15 percent per year," Rio chief executive Tom Albanese told a conference call.

Rio said it would fund the deal from newly committed bank facilities and sell Alcan's packaging business. Alcan said it has been in talks with prospective bidders for the business, which has annual revenue of $6 billion.

Rio said it did not anticipate any problems with competition regulators. Antitrust was expected to be an issue for an Alcoa-Alcan tie-up, with particular overlap in aerospace.

Alcan's CEO, Dick Evans, told Reuters that Alcoa and Alcan would have had "baggage" in the form of antitrust issues that would have eaten into the $1 billion of annual operating cost savings Alcoa had forecast.

Rio said it expects the deal to boost its earnings in the first year and to achieve $600 million of annual synergies, with about half that total realised in 2009.

Numis Securities analysts estimated the deal would boost Rio's forecast 2008 earnings by 10 percent to 12 percent.

They said Rio's offer was worth about 14.9 times Alcan's forecast earnings for 2008, a modest premium to the sector, but added that aluminium prices were closer to mid-cycle levels than many metals.

Evans will head the combined aluminium business, to be called Rio Tinto Alcan and based in Montreal, reporting to Albanese.

Alcan and Rio have agreed to a termination fee of $1.05 billion.

Rio said it had secured new banking facilities underwritten by Royal Bank of Scotland, Deutsche Bank, Credit Suisse and Societe Generale.

Rio's main advisers on the deal are Deutsche Bank and CIBC. Alcan is being advised by Morgan Stanley, JP Morgan, UBS and RBC Capital Markets.