RIO DE JANEIRO (Reuters) -- Brazilian mining giant Vale said Monday it was in talks with Anglo-Swiss rival Xstrata about a takeover, a deal that analysts said could top $100 billion in one of the biggest mergers ever.

Vale (VALE5.SA) (RIO.N), the world's largest iron ore producer, said launching what would be the largest takeover ever by a Brazilian company depended on market conditions. Vale shares slumped 9 percent on the news, also hit by a sell-off in global markets caused by fears of a U.S. economic recession.
The deal would be the latest in a wave of large companies from emerging economies scooping up rivals in Europe and North America. In 2006, Vale bought Canada's Inco for $17 billion after a revenue boost stemming from high world iron ore prices amid red-hot demand in China.
The acquisition talk also comes at a time when the world's biggest mining house BHB Billiton (BLT.L) is trying to buy rival Rio Tinto (RIO.L). BHP has until February 6 to sweeten its around $130 billion offer or step aside at least for 6 months.
Vale said in a statement current market conditions ""may constrain the realization of a major strategic move"" and that it will not stray from its ""prudent posture.""
It also said it was analyzing other acquisition options for mining assets around the world.
Xstrata's (XTA.L) shares initially rose on the news but then dropped to close 5.47 percent lower, trailing other stocks as well as falling nickel and copper prices. ""In an environment of a global consolidation of the mining industry, Vale has been maintaining a dialogue with Xstrata Plc management,"" Vale said.
Xstrata, which has been the subject of takeover speculation for months, declined to comment.
Vale's announcement came after Valor Economico and O Estado de Sao Paulo newspapers reported that the miner was in advanced talks with a group of banks to line up financing for the deal. Both reports valued the deal at up to $90 billion.
Vale said it has been exploring with banks ""several ways to support its growth initiatives in the event it decides to effectively pursue one of the above-mentioned options.""
Vale did not comment on reports that it is in talks with Xstrata's biggest shareholder, privately-held commodities trader Glencore, to accept up to $30 billion in voting shares as part of the payment. The rest would be paid in cash.
Glencore, which has a 34.6 percent stake in Xstrata, signaled it would accept the offer, according to Valor. Xstrata has been the subject of takeover talk before. In December, it confirmed that it held initial talks about a possible takeover but said no proposals were made.
Vale has been aggressively expanding overseas in recent years as it seeks to diversify beyond iron ore, a key ingredient in steel.
""Everything indicates the bid may indeed happen, but it isn't a trivial task for Vale. It's almost an entire company's worth they'd be putting in it,"" said Rodrigo Ferraz, a mining analyst at Banco Brascan in Rio de Janeiro.