UPDATE 2-Lundin Mining shares jump on BHP takeover talk

* Lundin shares jump more than 19 pct

* Canaccord raises rating on Lundin to "buy" from "hold"

TORONTO/LONDON Aug 9 (Reuters) - Shares of Lundin Mining rose more than 19 percent on Tuesday, after a British newspaper report cited rumors that mining giant BHP Billiton could be considering a bid.

The Daily Telegraph's Tuesday edition said in its market report that Anglo-Australian miner BHP was rumored to be in talks with zinc producer Nyrstar, previously linked to Lundin's Zinkgruvan mine in Sweden, over a joint bid for the group.

The report pushed Lundin's shares up 64 Canadian cents to C$5.05 Tuesday morning on the Toronto Stock Exchange.

Shares of Lundin have been pummeled in recent months, after a proposed tie-up with Inmet Mining fell apart and its hunt for an alternative proposal failed.

As of Monday, Lundin's Toronto-listed shares had fallen more than 50 percent and were well below their 52-week high of C$9.31.

Lundin has been considering strategic options since March, when a proposed C$9 billion ($9.1 billion) tie-up with Canadian rival Inmet fell apart, but the miner said in May it had rejected proposals from suitors as inadequate. It also parted ways with its chief executive, Phil Wright, who stepped down at the end of June.

Lundin and BHP declined to comment. A spokeswoman for Nyrstar said the group did not comment on market rumors and speculation.

BHP has been acquisitive in recent weeks, announcing plans to buy Petrohawk Energy last month for $12.1 billion. It agreed earlier this week to acquire a company providing mining services in the Pilbara iron belt in Western Australia from Leighton Holdings for $727 million.

Lundin owns a 24 percent stake in Freeport McMoRan's massive Tenke-Fungurume copper-cobalt mine in the Democratic Republic of Congo. It also owns the Neves-Corvo copper-zinc mine in Portugal, along with other assets in Sweden, Ireland and Spain.

Canaccord Genuity analyst Orest Wowkodaw raised his rating on Lundin to "buy" from "hold" on Tuesday, arguing that the recent selloff in Lundin's shares was overdone.

"While Lundin has encountered operational issues at Neves-Corvo this year, we view the shares as a relatively compelling risk/reward tradeoff at current valuation levels," said Wowkodaw in a note to clients.

"In our view, the recent selloff is well overdone, representing an attractive entry point for investors."