SYDNEY- Australian shareholders in Rio Tinto have welcomed the mining giant's decision to end merger talks with Glencore, and said it is now up to the company to deliver on a new strategy that it has put so much weight on.

The proposed merger, first announced in January, would have created the world's largest mining company, with a market value exceeding $200-billion. Rio said on Thursday the two companies could not strike a deal that delivered sufficient value to shareholders.

While exact details of any bid were not made public, Rio's investors had feared the miner, looking to build up its copper business, could pay too much to strike a deal with Glencore. Reuters reported Glencore had wanted its shareholders to have 40% of the merged company, citing a source.

"This is positive that Rio appears to be disciplined in not overpaying," said Andy Forster, Argo Investments' senior investment officer. "It would have created a few years of complexity and uncertainty getting the deal done and integrated."

Rio Tinto's Australian-listed shares rose as much as 2.6% to a record high in early trade, but pared those gains to be up about 1%. The S&P/ASX200 .AXJO was down 2%.

"This reinforces Rio's disciplined approach to capital management. We are very pleased to see Simon Trott pass his first test in the seat," said John Ayoub, Wilson Asset Management portfolio manager and Rio investor, referring to Rio Tinto's CEO, who took the helm last August.

"Ultimately it would have been a positive zero-premium merger but not at the takeover valuations that Glencore shareholders wanted," he said, adding Rio should now focus on its existing pipeline of growth projects.

Trott said under his leadership Rio Tinto would become "stronger, sharper and simpler" as he sought to hone in on Rio's key assets.

The Glencore bid was the "exact opposite" of the strategy laid out by Trott, said Hugh Dive, chief investment officer of Atlas Funds Management, a Rio Tinto shareholder.

"Miners have a terrible long-term track record for mega mergers," he said.

"It is probably a lucky escape for Rio, but it also signals management's new desire to swing the bat at large acquisitions."