UPDATE 2-Rio sells American food packaging assets for $1.2 bln

* Sale to U.S. firm Bemis Co includes at least $1 bln cash

* Rio may write down rest of non-aluminium Alcan assets

* Sources says Amcor still in race of other packaging assets

* Rio shares down 2.2 pct in soft market (Adds background, quote)

By Denny Thomas

SYDNEY, July 6 (Reuters) - Global miner Rio Tinto (RIO.AX) (RIO.L) further improved its cash position on Monday by agreeing to sell its Americas food packaging business for $1.2 billion, and analysts said they expected more asset sales to follow soon.

Rio Tinto, which only last week raised $15.2 billion in one of the world's largest-ever rights issues, will sell the assets to U.S.-based Bemis Co Inc (BMS.N) for $1 billion in cash, with the rest potentially paid in the form of Bemis shares.

The deal moves Rio Tinto closer to the day when it can draw a line under its near-disastrous 2007 acquisition of aluminium and packaging firm Alcan. Bought near the height of the commodities boom, Alcan left Rio Tinto with $38 billion in debt.

Rio Tinto had hoped to repay some of the Alcan debt by quickly on-selling the packaging assets, but the global financial crisis delayed that plan as asset prices tumbled.

Rio Tinto said the remaining Alcan non-aluminium assets were still on the auction block, with their book value likely to be written down ahead of their sale.

Separately, two sources told Reuters, Australian packaging group Amcor Ltd (AMC.AX) was still in talks to buy some of the remaining packaging assets from Rio, which Citigroup estimates could potentially fetch in excess of $2 billion. [ID:nSYU006799].

An Amcor spokesman declined to comment.

Analysts widely expect Amcor to raise up to A$2.0 billion in fresh equity if it wins the auction.

"Any packaging assets that Rio is getting rid of its balance sheet is good and will be liked by the market," Olivia Ker, research analyst with Merrill Lynch, said after the news. Monday's announcement takes Rio's expected proceeds from asset sales this year to $3.7 billion, and analysts say Rio would be encouraged to sell other non-core assets in the coming days.

"The rest of the packaging business is certainly on the cards, the rest of the coal division is still on the cards," Ker added.

Rio Tinto shares fell 2.2 percent at A$48.50, in line with its major mining rival, BHP Billiton (BHP.AX) (BLT.L), which shed 2.4 percent.