Shares in miners BHP Billiton and Rio Tinto dropped after a newspaper said Rio's proposed acquisition by BHP was facing tougher than expected scrutiny from European regulators.

The Wall Street Journal, citing people close to the matter, said European regulators were worried that the all-share offer, currently worth about $184 billion, could boost steel prices and slow economic development across the world.

Rio Tinto has rejected BHP's offer.

The Journal said BHP Chief Executive Marius Kloppers was confident regulators would not block the deal and he could complete it by the fourth quarter of this year.

But those close to BHP acknowledge that they are facing more questions from regulators than they expected, the newspaper said.

BHP was not immediately available for comment.

European Commission spokesman Jonathan Todd said regulators had not received a formal notification of the bid proposal.

"The Commission never comments on contacts that may or may not be taking place prior to notification of a deal," he said.

Commission rules permit - or even encourage - companies to negotiate with the Commission before filing formally for permission to merge. Once formal filing takes place a clock starts running, limiting the time for talks and investigation.