By Eric Onstad

LONDON (Reuters) - Acquisitive miner Xstrata (XTA.L: Quote, Profile, Research) unveiled a $10 billion takeover bid for the world's third-biggest platinum producer Lonmin (LMI.L: Quote, Profile, Research), aiming to diversify its business from industrial metals such as copper.

South Africa-focused Lonmin swiftly rejected the bid on Wednesday as its shares soared 51 percent to a high of 35 pounds, slightly over Xstrata's planned offer of 33 pounds a share, implying investors see scope for a sweetened bid.

Lonmin shares, which had shed 36 percent since May 19, were trading up 47 percent at 34.11 pounds at 1033 GMT.

Anglo-Swiss Xstrata's swoop is part of a wave of consolidation in the metals sector amid booming demand from China that has sent prices soaring over the past few years.

Five months ago, Xstrata escaped being bought when a takeover attempt by Brazil's Vale (VALE5.SA: Quote, Profile, Research) failed.

Xstrata said it planned to buy more Lonmin shares in the market on Wednesday, adding to an 8 percent stake it bought from several major shareholders after the close on Tuesday.

Lonmin rejected the bid as undervaluing the firm. "This is an opportunistic and entirely unwelcome attempt to acquire Lonmin at a price which undervalues its unique assets," the company said.

BlackRock fund manager Graham Birch, a major Lonmin shareholder, said: "It's a bit opportunistic because all the mining shares have been so battered in the last six weeks or so."  Continued...