Bounce in Glencore's commodity prices could kick-start dormant deal machine

* Glencore (Xetra: A1JAGV - news) 's deals track record a mixed bag

* 13 analysts have buy rating on stock vs five sell

* Share (LSE: SHRE.L - news) buyback more likely than big acquisition this year

* But copper bounce versus iron ore drop will fund more buys

By Silvia Antonioli

LONDON, March 24 (Reuters) - Just two weeks before Glencore can make a new approach for Rio Tinto (Xetra: 855018 - news) , the rival that rejected it last summer, the Swiss firm once seen as a deal machine seems unlikely to strike again or charm investors with any other major move soon.

The trading and mining company's shares were hit by a slump in copper prices this year, and its debt is high, diminishing its dealmaking ability and focusing attention instead on the quality of assets that it bought in previous spending sprees.

Glencore's portfolio includes some high costs and problematic assets. While Rio Tinto and BHP have the largest, lowest cost iron ore assets in the world in Australia, Glencore relies for a big chunk of earnings on operations in risky countries such as the Democratic Republic of Congo.

It's also struggling with some oil and mining assets, having bought Chad-focused oil business Caracal ahead of a collapse in oil prices and being forced to post a $8 billion writedown on mining assets acquired in its record breaking $46 billion buy of Xstrata in 2013 - the largest ever mining acquisition.

"The rationale of their deals is always sound but timing wise there are certainly some question marks. It shows they have got as little visibility as the others when it comes to prices," said Macquarie analyst Jeff Largey.

Short-term, sources close to the company say it will consider a share buyback, possibly as soon its first half results in August, to lift its struggling share price.

"They are not exactly rolling in cash at the moment but a buy back would be the most likely use of any extra money this year," said one industry source with knowledge of the company.

Longer-term, analysts broadly expect that higher prices for Glencore's commodity mix - copper, zinc and nickel - will give it the edge against rivals whose iron ore operations are likely to keep suffering from falling prices.

That divergence could in turn fund Glencore's next buying spree.

According to Reuters I/B/E/S, 13 analysts still recommend buying the stock while five have a sell rating on it.

SECOND ACT

Few observers believe that Glencore chief executive Ivan Glasenberg's acquisitions ambition is satiated and the company needs to improve its range of assets to keep investors happy.

Earlier this month, at Glencore's annual results conference, Glasenberg also noted that he expected Glencore's commodity mix to start to outperform those of its peers.

"I think you are going to see quite a big divergence in their performance going forward and Glencore seems very well positioned given its exposure," said Investec (LSE: INVP.L - news) fund manager Hanre Rossouw, formerly an executive at Xstrata.

A continued fall in iron ore also makes it more likely that Glencore can ultimately buy a significant asset in that business near the bottom of the market. Glencore does not own producing iron assets but it trades the bulk material already and would like to gain more access to supply.

For the moment though, Rio Tinto, the world's lowest cost iron ore producer that's still top of Glencore's wish list, seems out of reach, despite British takeover law saying Glencore could have another shot at it come April 7.

The Swiss firm has a higher net debt to earnings ratio than its peers and could only engage in an all-shares deal in order to protect its credit rating. But its share price is not attractive, having only partially recovered from an all-time low hit in January.

More importantly, Rio Tinto chief executive Sam Walsh, a more conservative executive than Glasenberg, has openly expressed aversion to a deal with Glencore.

Yet, if analysts' commodity price forecasts are correct, Glasenberg's ambition might be rewarded in the longer term.

"The pressure on iron ore prices is going to play out in the next 18-36 months and there will be potential then for Glencore to put its hands on some material iron ore producing assets," said the industry source.

"But it takes time. If this was a Shakespeare play this would be only the second act out of five." (Editing by Sophie Walker)