November 14, 2017 / 8:55 AM / a year ago

UPDATE 1-Ex-Xstrata chief Davis eyed for Rio Tinto chairman's job -FT

* Davis has held talks with Rio over post - FT

* Entrepreneurial spirit good and bad, say investors

* Credited as architect of deal with Glencore

* Currently chief executive of British Conservative Party (Adds investor comment, details)

By James Regan

SYDNEY, Nov 14 (Reuters) - Rio Tinto investors gave a mixed reaction to a report that former senior mining executive Mick Davis, now chief executive of Britain's ruling Conservative Party, was well-placed to become the Anglo-Australian miner's next chairman.

The Financial Times newspaper reported late on Monday that Davis, the former head of Xstrata and architect of a $62 billion deal that saw it absorbed by Rio rival Glencore PLC in 2012, has emerged as a frontrunner for the post.

The South African-born businessman has held talks with Rio over the position, the newspaper said, citing unidentified people familiar with the matter.

Rio, due to name a successor to current chairman Jan du Plessis by the end of the year, declined to comment.

Shares in Rio closed nearly 1 percent lower in Sydney, in line with the benchmark ASX 200 index, as investors digested the potential implications of the appointment.

"The culture at Xstrata was less measured and more entrepreneurial than Rio's," said a Sydney-based fund manager, whose group owns Rio stock. He declined to be named as he wasn't authorised to discuss the matter with media. "It's hard to say if that approach would go down (well) there (at Rio)."

But Davis' entrepreneurial ability - lauded by British Prime Minister Theresa May in confirming his appointment as Conservative Party chief in June - was welcomed elsewhere in the market.

"He has the relevant profile and skill set for the job," said Brenton Saunders, a portfolio manager at BT Investment Management, which owns Rio stock.

Rio's search for a new chair has been disrupted by unwelcome events.

John Varley, the non-executive director tasked with leading the search for a replacement for du Plessis, resigned the Rio board of in June after he was charged in Britain with fraud while chief executive of Barclays.

Meanwhile, the U.S. Securities Exchange Commission in October charged Rio and two of its former top executives with fraud, saying they inflated the value of Mozambique coal assets and concealed critical information while tapping the market for billions of dollars.

The two former executives deny the charges, and Rio said it would defend itself vigorously against the SEC's allegations.

Amid the challenges facing Rio's management, some investors questioned whether Davis' leadership style would be the right fit for the miner.

"Davis is a very astute dealmaker, but whether that can be transferred into an effective chairman is untested," said a Sydney fund manager holding Rio stock, who declined to be named given the sensitivity of the issue. (Reporting by James Regan; Additional reporting by Sonali Paul in MELBOURNE; Editing by Richard Pullin and Kenneth Maxwell)

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