Media is abuzz with rumors that China may soon direct Chinese companies involved in mining operations in Australia to acquire stake in Australian mining giant BHP Billiton on order to block a merger with Rio Tinto.

The rumors stemmed from a report in The Australian Today which cited an anonymous source in Beijing as saying that China is in the early stages of planning to acquire over a 9% stake in BHP, following a market raid in February where the Aluminum Corporation of China Group teamed up with US based Alcoa to purchase stake in BHP's rival Rio Tinto.

The report said Chinese authorities have not yet determined which state-owned financial institution or steel mill may take a leading role in seeking sellers from BHP's diverse shareholder base.

A steel industry source told Interfax that "A move by China to snap up a stake in BHP in an attempt to block a BHP-Rio merger has long been bandied about. By scanning China's current involvement in Australian mining projects, it's not hard to guess at possible candidates for the task."

BHP's share price on the Australian Stock Exchange closed up 3.74% from the previous trading day at AUD 41.91.