BHP Billiton has lined up a $70 billion financing package to bolster its $140 billion takeover approach for rival miner Rio Tinto, the Financial Times said on Saturday.

Rio rejected the all-share offer from BHP Billiton on Thursday, saying it was too low. But there is speculation BHP will sweeten its offer, which helped boost Rio shares for a second day on Friday.

The FT, quoting market sources, said BHP's arrangement of debt facilities through U.S. bank Citigroup (C.N: Quote, Profile, Research) indicated it may make a hostile bid.

BHP declined to comment and Citigroup could not immediately be reached for comment.

Rio's board is open to a higher BHP approach and other offers, a source familiar with the matter told Reuters on Friday.

A marriage of BHP and Rio would create the world's biggest mining force, capable of controlling the global flow of loads of iron ore, copper, coal and other commodities for industrial use.

Analysts said the BHP approach may be just the first shot in a battle that could draw in other parties and push the bidding for Rio above $170 billion.

(Additional reporting by Eleanor Wason)

(Reporting by Steve Slater, Editing by Peter Blackburn)

Citigroup