The Hong Kong-traded shares of Aluminum Corp. of China Ltd. (ACH), or Chalco, bucked broad gains in commodities prices to close lower Friday, after Rio Tinto Ltd. (RTP) scrapped its planned US$19.5 billion alliance with the Chinese company's parent.

Chalco ended 2.07% lower at HK$8.06, despite a 0.96% gain in the benchmark Hang Seng Index and sharply higher base metals prices on the London Metal Exchange overnight, with aluminum gaining nearly 6% on the day to hit a four-week high.

The Chinese company's stock has risen 125% since Feb. 1, when the planned deal between Rio Tinto and Aluminum Corp. of China, or Chinalco, was confirmed.

Macquarie Capital Securities analyst Andrew Dale said the scrapping of the deal dashed investors' hopes of Chalco gaining a secure supply of raw materials and an injection of more aluminum assets from Chinalco, which would have boosted its share price further.

Rio Tinto said Friday that improving market conditions were behind the decision to terminate the deal, which would have been China's biggest ever overseas investment.

Instead, the Anglo-Australian miner will pursue a US$15.2 billion rights issue and enter into an iron-ore joint venture with BHP Billiton Ltd..

Citigroup maintained its sell recommendation on Chalco, saying investors' sentiment toward the stock could be negatively affected by the development, even though the fundamentals of the company's operations remain basically unchanged.

"In the past the Rio-Chinalco deal has been one of the key positives for sentiment and one of the major concerns for short sellers," Citigroup analyst Catherine Wang wrote. Chinalco Vice President Lu Youqing said earlier Friday the company hasn't begun to consider Rio Tinto's rights issue yet, but it is looking into it and will decide soon.

Analysts said, however, they expect the Chinese company to participate, because it already owns around 9% of the Rio Tinto group.

-By Jackie Cheung, Dow Jones Newswires; 852-2802-7002; jackie.cheung@dowjones.com