Analysts have slashed their recommendation on BHP Billiton following its rejected bid for Rio Tinto. Independent broker Landsbanki said the offer has 'taken all of the near-term upside out of the company.'

'We believe the deal may prove to be too expensive to be worth completing, but it may take a year for this to become clear,' said Landsbanki's Martin Potts. 'We move from Buy to Reduce.'

Shares continued their retreat since the bid announcement, down 19p, or 1.2%, at 1,583 pence. Despite this, BHP Billiton believes shareholders are supportive of the merger, BHP chief executive Marius Kloppers reportedly said in comments published today.

Kloppers said investors in both Rio and BHP he had met so far had been broadly supportive of the rationale behind the deal. He was speaking in South Africa, which he is visiting as part of a global roadshow to sell the group's proposed £74 billion merger with its Anglo-Australian rival, the article said.

Kloppers said he had met around half of Rio's UK shareholders and 'slightly less' of its Australia-based investors: 'Shareholders own companies, not management, and they'll eventually tell management what to do,' he said, adding BHP will 'continue to seek engagement' with Rio Tinto's board.

Last week BHP declined to comment on speculation that it is to announce a sweetened offer for Rio. Rio Tinto rejected BHP's 3-for-1 share offer and refused requests from the world's largest miner to hold talks on the mega-merger, saying the offer undervalued the company.