Financial market turmoil has scuppered Xstrata's £5 billion bid for platinum miner Lonmin.

Xstrata had until tomorrow afternoon to decide but said it did not intend to pursue the takeover.
In a dawn raid aimed at scuppering rival bids, Xstrata chief executive Mick Davis scooped up 14% of Lonmin shares to give his company a blocking stake. With its existing holding, Xstrata now owns 25%.

Meanwhile, the biggest mining deal around at present — the $101 billion (£56.71 billion) all-share bid by BHP Billiton for rival Rio Tinto — received a boost today with Aussie regulators saying they would not oppose it.

The Australian Competition and Consumer Commission said it "would not be likely to substantially lessen competition in any relevant market".

Xstrata has built a 10.7% stake in Lonmin, the world's third-largest platinum producer, and was offering £33 a share in cash.

Chief executive Mick Davis said the credit crisis "introduces significant risks into the financing package", particularly "in respect of the requirement in the proposed financing terms to refinance a substantial portion of the debt funding within 12 months".

A spokeswoman for the company said the withdrawal was disappointing but financing looked impossible in the current climate. She would not say if it would make a renewed bid for Lonmin in the future.

Under Takeover Panel rules, Xstrata cannot make a lower bid for Lonmin within a year of pulling out of the current proposal.

The move is also a blow for Lonmin, which had until recently been hoping for a sweetened offer.
Chairman Sir John Craven had rejected Xstrata's proposal as "opportunistic" and undervaluing the company's assets.

Davis said the financing deal problem "does not change the fundamental robust nature of Xstrata's cash generative portfolio and profitability."