SYDNEY, Australia (AP) -- Shares of BHP Billiton Ltd. and Rio Tinto Ltd. surged in Australia on Wednesday as fresh rumors swirled around the two companies linked by what could be the largest takeover ever in the mining sector.

BHP Billiton shares rose as much as 6 percent on rumors that an unnamed Chinese entity is seeking to build a stake in the mining giant. Rio Tinto shares, meanwhile, climbed as much as 4.9 percent on market talk in London that BHP Billiton was preparing to raise its takeover bid for Rio.

Some analysts remain skeptical that any Chinese companies would move to take a stake in BHP in the near term. The Chinese, they say, recognize that the pace of investment by Chinese government-backed entities in the sector has sparked some concern in .

Some say the Australian government has moved to slow the approval of Chinese investments by the Foreign Investment Review Board.

''If they took a small stake like they did with Rio, that's fair enough, but whether FIRB would actually let them take a meaningful stake in BHP is another thing entirely,'' said Southern Cross Equities analyst David Radclyffe.

Separately, BHP Billiton Chief Executive Marius Kloppers played down any imminent increase in the company's bid for Rio Tinto in a Tuesday television interview with CNBC.

BHP has ''quite a while to run on this bid,'' he said.

BHP is offering 3.4 of its own shares for each Rio Tinto share, which values Rio at around US$175 billion based on BHP's closing share prices in London and Sydney on Tuesday. The speculation in London was that BHP would soon raise its bid to 3.8 shares for each Rio share.

Any move by a Chinese company to take a stake in BHP Billiton would be a further dramatic escalation in China's investment in the Australian mining sector. Aluminum Corp. of China bought a 9 percent stake in Rio Tinto in February, and Sinosteel Corp. in late April saw its bid worth US$1.3 billion approved by the Australian board of iron ore miner Midwest Corp. Ltd.

In afternoon trade in Sydney, BHP shares were up 5.2 percent at A$48.14. Rio Tinto's shares were up 4.8 percent at A$151.39.