A major row was brewing today over mining giant Rio Tinto's plan to raise more than £10 billion by selling assets and a huge stake in the business to China's state-owned metals company.

Rio said yesterday it was in talks to sell minority stakes in a number of its businesses to Chinalco alongside a shares deal that could leave the Chinese group owning 18% of the business.

Merrill Lynch analysts today urged the company to scrap the plan because of concerns about the Chinese holding too great an influence over Rio's future, potentially blocking lucrative takeover offers.

“We are concerned whether the proposed transaction is in the best interests of Rio shareholders,” the report by Merrill's Olivia Ker said. She said Rio's shareholders would be better off if the company raised its much-needed cash through a conventional fundraising share issue to a wide range of investors.

Chinalco last year acquired a 9% stake in Rio when it was fending off a $66 billion (£45.9 billion) bid by rival BHP Billiton. Rio is trying to cut its debt by $10 billion this year, but has been hampered by the economic crisis.