UPDATE 1-Chile's SQM jumps after Potash Corp rejects bid

(Adds details and SQM background)

SANTIAGO Aug 17 (Reuters) - Chile's fertilizer SQM SQMa.SN SQM_pb.SN shares jumped over 6 percent on Tuesday after Potash Corp (POT.TO) (POT.N), a key stakeholder, said its board rejected an unsolicited $39 billion offer from miner BHP Billiton (BHP.AX) (BLT.L).

Potash, which has a 32 percent stake in SQM, surged nearly 28 percent at 10:39 a.m. EDT (1439 GMT).

The bid reflects BHP desire to capitalize on a resurgence in the global fertilizer industry following a collapse in demand during the global economic slowdown. [ID:nNSGE67G0D]

Analysts said a steep recovery in the fertilizer business and expectations of a higher counter-bid by BHP boosted views for SQM's asset value.

BHP said it continues to review its options and will make a further announcement in due course.

SQM, which holds many concessions in mineral-rich Chile, is one of the world's top producers of iodine and lithium.

Shares in SQM are trading near seven-month intraday highs at 21,300 pesos, but still far from the all-time record of 29,100 pesos per share seen in mid 2008. ($1= 505.30 Chilean pesos) (Reporting by Alonso Soto and Antonio de la Jara, editing by Gerald E. McCormick)